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Citation Information

Type Working Paper - University of Connecticut Economics Working Papers
Title Does the presence of surplus labor hinder production in Indian manufacturing?
Author(s)
Publication (Day/Month/Year) 2003
URL http://digitalcommons.uconn.edu/cgi/viewcontent.cgi?article=1243&context=econ_wpapers&sei-redir=1&re​ferer=https://scholar.google.com/scholar?start=950&q=india+"Annual+Survey+of+Industries"&hl=ro&as_sd​t=0,5#search="india Annual Survey Industries"
Abstract
Input congestion occurs at a given input bundle when the assumption of free
disposability of inputs does not hold and an increase in input leads to a decline
in output. In this paper we employ the nonparametric method of Data Envelopment
Analysis (DEA) to examine the question on input congestion with respect to
labor, using state level data from the Annual Survey of Industries for the period
1986-87 through 1999-2000. When the standard assumption of strong disposability
is relaxed for the labor inputs, the nonparametric analysis of state-level data
from Indian manufacturing shows considerable measure of labor input congestion.
While in selected states congestion comes from non-production workers as
well, the principal source of labor congestion is production labor. There is no
evidence that the problem of labor congestion has become less severe during the
post-Reform years. It appears that market forces without any major institutional
changes in enforcement of labor discipline cannot eliminate congestion.

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