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The Impact of Lifting Firing Restrictions on Firms:
Evidence from a State-Level Labor Law Amendment

with Siddharth Sharma (World Bank)

Stringent employment protection laws are argued to be a cause of reduced employment flexibility, slower growth and increased reliance on temporary employment contracts in many countries, including India. In 2014, the Indian state of Rajasthan amended labor laws to increase employment flexibility in firms. The most discussed of the amendments lifted the requirement for government approval for retrenching regular workers in medium-size factories. This paper first conducts a synthetic control analysis of the policy change using state-level panel data from 1980 to 2018, finding no evidence of an impact on aggregate manufacturing employment and output. The paper then uses firm-level panel data to conduct a difference-in-differences analysis of the main amendment, exploiting its size-dependent feature for identification. This analysis finds that the amendment reduced the implicit regulatory cost of labor in firms, but there is no discernible impact on their total employment and output. The amendment also led to firms substituting temporary (“contract”) workers for permanent workers. This collateral impact is contrary to the expectation that easing the flexibility of permanent employment arrangements would make them more attractive to firms.

More Growth, Less Garbage
with Silpa Kaza (World Bank) and Siddarth Shrikanth

More growth, less garbage presents an updated picture of how waste generation can grow if the world continues along the current trajectory and how to consider changing that path toward lower waste levels. Waste generation is estimated to grow from 2.24 billion tons in 2020 to 3.88 billion tons in 2050. Historically there has been a correlation between waste generation and income per capita. This publication explores the possibility of decoupling waste generation, and thus consumption, from economic growth. Five case studies of waste reduction, in terms of residual waste and or total waste, are highlighted from cities and countries across the world. In each location, decisions to reduce or divert waste were driven by a different factor, such as lack of land, the need to be more resilient, or the need to reduce costs of the overall waste system. If waste reduction policies were adopted in more places around the world, one can envisage a world in 2050 with more growth and less garbage than today.

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