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The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

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  • Philippe Aghion
  • Robin Burgess
  • Stephen Redding
  • Fabrizio Zilibotti

Abstract

We study the effects of the progressive elimination of the system of industrial regulations on entry and production, known as the "license raj," on registered manufacturing output, employment, entry and investment across Indian states with different labor market regulations. The effects are found to be unequal depending on the institutional environment in which industries are embedded. In particular, following delicensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12031.

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Date of creation: Feb 2006
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Publication status: published as Aghion P, Burgess R, Redding S and Zilibotti F. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India." American Economic Review 94, 4 (2008): 1397-1412.
Handle: RePEc:nbr:nberwo:12031

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