Publication

In this working paper, the authors look at how major trade reforms initiated in India in 1991 affected the industry-level elasticity of labor demand in the manufacturing sector. Having estimated economic models for these conditions, the authors discover that the response of labor demand elasticities to protective practices is conditioned by the nature of labor institutions; after the trade reforms, productivity and output volatility have resulted in larger wage and employment volatility. The need for the development of effective institutions for protecting the welfare of workers adversely affected by trade is also identified.