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The Distribution of Firm Size in India: What Can Survey Data Tell Us?

Author

Listed:
  • Hasan, Rana

    (Asian Development Bank)

  • L. Jandoc, Karl Robert

    (Asian Development Bank)

Abstract

We use establishment-level data from Indian manufacturing to describe the distribution of firm size in terms of employment, and discuss implications for public policy. A unique feature of our analysis is the use of nationally representative establishment-level data from both the registered (formal) and unregistered (informal) components of the Indian manufacturing sector. We also examine how the distribution of firm size varies across states coded by recent literature as having either flexible or inflexible labor regulations. We find little difference in the size distribution of firms between states believed to have flexible labor regulations versus those with inflexible labor regulations. However, restricting attention to labor-intensive industries, we find a greater prevalence of larger-sized firms in states with flexible labor regulations. This suggests that labor regulations may indeed be affecting firm size adversely. More generally, our paper serves to illustrate the point that establishment-level survey data represent a very rich source for work on public policy issues.

Suggested Citation

  • Hasan, Rana & L. Jandoc, Karl Robert, 2010. "The Distribution of Firm Size in India: What Can Survey Data Tell Us?," ADB Economics Working Paper Series 213, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0213
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    Citations

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    Cited by:

    1. World Bank, 2012. "World Development Report 2013 [Rapport sur le développement dans le monde 2013]," World Bank Publications - Books, The World Bank Group, number 11843, April.
    2. Dipankar Gupta, 2020. "Think “Big”: Strategizing Post-coronial Revival in India," The Indian Journal of Labour Economics, Springer;The Indian Society of Labour Economics (ISLE), vol. 63(1), pages 145-150, October.
    3. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2016. "Highway to Success: The Impact of the Golden Quadrilateral Project for the Location and Performance of Indian Manufacturing," Economic Journal, Royal Economic Society, vol. 126(591), pages 317-357, March.
    4. Das, Abhiman & Ghani, Ejaz & Grover, Arti & Kerr, William & Nanda, Ramana, 2024. "JUE insight: Infrastructure and Finance: Evidence from India’s GQ highway network," Journal of Urban Economics, Elsevier, vol. 142(C).
    5. Larbi-Siaw, Otu & Xuhua, Hu & Owusu, Ebenezer & Owusu-Agyeman, Abigail & Fulgence, Brou Ettien & Frimpong, Samuel Akwasi, 2022. "Eco-innovation, sustainable business performance and market turbulence moderation in emerging economies," Technology in Society, Elsevier, vol. 68(C).
    6. Swati Agrawal & Poonam Singh & Mainak Mazumdar, 2021. "Innovation, Firm Size and Ownership: A Study of Firm Transition in India," International Journal of Global Business and Competitiveness, Springer, vol. 16(1), pages 15-27, June.
    7. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "The exceptional persistence of India's unorganized sector," Policy Research Working Paper Series 6454, The World Bank.
    8. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2013. "Female business ownership and informal sector persistence," Policy Research Working Paper Series 6612, The World Bank.
    9. Yana van der Meulen Rodgers & Nidhiya Menon, 2013. "Labor Regulations and Job Quality: Evidence from India," ILR Review, Cornell University, ILR School, vol. 66(4), pages 933-957, July.
    10. Klaus Desmet & Ejaz Ghani & Stephen O'Connell & Esteban Rossi-Hansberg, 2015. "The Spatial Development Of India," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 10-30, January.
    11. Vincent CAUPIN & Stéphanie PAMIES-SUMNER, 2017. "The challenges of India‘s economic policy," Working Paper bda91b64-2f19-4f87-bd32-1, Agence française de développement.
    12. Siddharth Kothari, 2014. "The Size Distribution of Manufacturing Plants and Development," IMF Working Papers 2014/236, International Monetary Fund.
    13. Bishwanath Goldar & Arup Mitra, 2013. "Small versus large manufacturing units: how efficient are they?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(4), pages 634-653.
    14. Balu Pawde & Tara Shankar Shaw & Pushpa L. Trivedi, 2024. "Manufacturing Activity and Inequality in India," Journal of Quantitative Economics, Springer;The Indian Econometric Society (TIES), vol. 22(4), pages 911-944, December.
    15. Ejaz Ghani & Arti Grover Goswami & William R. Kerr, 2012. "Is India’s Manufacturing Sector Moving Away From Cities?," Harvard Business School Working Papers 12-090, Harvard Business School.
    16. Ghani, Ejaz & O'Connell, Stephen D. & Sharma, Gunjan, 2013. "Friend or foe or family ? a tale of formal and informal plants in India," Policy Research Working Paper Series 6588, The World Bank.
    17. Fix, Blair, 2017. "Energy and Institution Size," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 12(2), pages 1-22.
    18. Ghani, Ejaz & Goswami, Arti Grover & Kerr, William R., 2013. "Highway to success in India : the impact of the golden quadrilateral project for the location and performance of manufacturing," Policy Research Working Paper Series 6320, The World Bank.
    19. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2017. "What Determines Entrepreneurial Outcomes in Emerging Markets? The Role of Initial Conditions," The Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2478-2522.
    20. Fix, Blair, 2016. "Energy and Institution Size," Working Papers on Capital as Power 2016/04, Capital As Power - Toward a New Cosmology of Capitalism.
    21. Sayani Roy Chowdhury & Sahana Roy Chowdhury, 2016. "Policy Reforms and SME Performances: A Comparison of Two Major EMEs," Emerging Economy Studies, International Management Institute, vol. 2(2), pages 145-155, November.
    22. James Tybout, 2014. "The Missing Middle: Correspondence," Journal of Economic Perspectives, American Economic Association, vol. 28(4), pages 235-236, Fall.

    More about this item

    Keywords

    Size Distribution of Firms; Labor Regulations; India;
    All these keywords.

    JEL classification:

    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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