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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 whether the effects on registered manufacturing output of dismantling the License Raj – a system of central controls regulating entry and production activity in this sector – vary across Indian states with different labor market regulations. The effects are found to be unequal across Indian states with different labor market regulations. In particular, following delicensing, industries located in states with proemployer labor market institutions grew more quickly than those in proworker environments.

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Paper provided by Institute for Empirical Research in Economics - University of Zurich in its series IEW - Working Papers with number 345.

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Date of creation: Dec 2007
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Handle: RePEc:zur:iewwpx:345

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Keywords: Distance to frontier; India; Industrial policy; Financial development; Labor regulation; Liberalization; Manufacturing; Reform.;

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