Chatterjee, UrmilaKanbur, Ravi2014-02-032014-02-032014-01https://hdl.handle.net/10986/16823Noncompliance with regulations by enterprises is said to be rife in developing countries. Yet there is limited systematic evidence of the magnitude of noncompliance at the enterprise level. Making innovative use of two complementary data sources, this paper quantifies noncompliance for India's Factories Act without the question of illegality ever being raised directly with enterprises. The paper finds that more than twice as many firms are not complying as are complying. Further, the number of noncompliant firms is much larger than the number of firms adjusting out of the regulation. Thus noncompliance with the Factories Act is a key feature of the "missing middle" in India. The paper explores the main trends and patterns of noncompliance and highlights a number of key issues for further analytical and policy research.en-USCC BY 3.0 IGOCO-OPERATIVESECONOMIC THEORYECONOMICSEMPLOYMENTEMPLOYMENT SHAREEMPLOYMENT SIZEENFORCEMENT COSTSENFORCEMENT RESOURCESENTERPRISE SIZEENTREPRENEURIAL ABILITYEXPANSIONFIRM SIZEFIRMSHOUSEHOLD SURVEYSIMPACT OF REGULATIONINCOMEINFORMAL ECONOMYINFORMAL EMPLOYMENTINFORMAL SECTORLABOR FORCELABOR LAWLABOR LAWSLABOR MARKETLABOR MARKET RIGIDITIESLABOR PRODUCTIVITYLABOR REGULATIONSLABOR RELATIONSLABOURMANUFACTURING ENTERPRISESMEDIUM SIZE ENTERPRISESMINIMUM WAGEMINIMUM WAGE LAWMINIMUM WAGESNONCOMPLIANCEPOLITICAL ECONOMYPREVIOUS SECTIONPRODUCTION FUNCTIONPRODUCTIVE FIRMSPRODUCTIVITY GAINSPRODUCTIVITY GROWTHPROVIDENT FUNDSREGULATORY BURDENREGULATORY SYSTEMSAFETYSIZE OF ENTERPRISETAXATIONTOTAL EMPLOYMENTWAGE RATEWORKERWORKERSWorld Bank10.1596/1813-9450-6755