Statistical Discrimination and Work-Place Productivity: A Case Study of The Textile Industry in Ludhiana (Punjab)

Abstract

The absence of economic growth benefits trickling down widens social and economic disparities, prompting out-migration among low-income groups. However, a diverse workforce at the source of migration also raises the likelihood of workplace discrimination. The present study examines the existence of productivity-induced statistically discriminatory hiring practices in the textile industry of Ludhiana city, Punjab, during August 2021. 11 per cent of the sampled firms offer wage advantages to immigrant workers, supplemented by perks like accommodation and extended leaves. Statistical models and tests confirm employer bias towards immigrant workers. This preference reflects immigrant efficiency and various factors like labour shortages and resistance to new techniques by Punjabi workers. Despite claims of providing welfare perks, employee unions report exploitation. The study predicts three potential futures: capitalist exploitation, bilateral monopoly, or local labour competence. Policymakers must ensure social security for vulnerable workers and adopt a bottom-up welfare approach to enhance industry welfare and efficiency.