July 28, 2025

Impact of Non-Regular Employment on firm Productivity: Evidence from Indian Industrial Sector

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Firms using contract labour see a 5.3% increase in marginal productivity of labour compared to non-contract firms.
Total factor productivity is 5.9% higher in contract labour-intensive firms, indicating efficiency gains.
Results vary by industry, with some sectors showing negative effects from high contract labour reliance.
Long-term productivity may suffer if contract labour reduces investment in human capital and skills.

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Analysis reveals contract labour boosts productivity in firms, suggesting a need for balanced employment policies.

Rather et al. (2025) studied this question.

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