This paper makes a critical intervention to on-going theoretical and policy
debates in the economic analysis of labour market institutions (LMIs) in the context
of recent debates in India. It focuses on the internal inconsistency of mainstream
economic analyses of LMIs, in particular those based on the new institutional
economics (NIE) approach, and what appears to be an emerging policy consensus on
LMIs within the World Bank and the International Labour Organization (ILO). The
paper draws out the possible ideological parallels in these two developments, despite
different intellectual origins and intentions of those engaged in these debates. A
corresponding modification in policy debates in India is observed in the shifting
perspectives from the Second National Commission on Labour (SNCL) to the
National Commission for Enterprises in the Unorganised Sector (NCEUS). The
apparent emerging consensus in both the theoretical literature and policy debates
reveals the tendency for researchers to focus on labour market outcomes and
phenomenal forms of LMIs rather than the structures, processes, agencies and
relations that underpin them. While this can be seen as an advancement from the
traditional distortionist-institutionalist dichotomy, the tendency of this consensus to
explain the persistence of seemingly inefficient institutions within the micro-level
choice theoretic framework and its appeal to policy agendas on good governance,
social capital, trust and civil society, render it vulnerable to appropriation by the
mainstream. The paper argues that the emerging consensus on LMIs is an inadequate
framework to inform effective policy propositions, and highlights the scope and
opportunity for a political economy alternative.

• Emerging Consensus on Labour Market Institutions and Implications for Developing Countries: From the Debates in India