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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
      [Informe anual del Banco Mundial de 2013 : poner fin a la pobreza extrema, promover la prosperidad compartida - informe principal]
      ," World Bank Publications, The World Bank, number 11843, August.
    2. 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.
    3. 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.
    4. 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.
    5. 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.
    6. 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.
    7. Meghana Ayyagari & Asli Demirguc-Kunt & Vojislav Maksimovic, 2017. "What Determines Entrepreneurial Outcomes in Emerging Markets? The Role of Initial Conditions," Review of Financial Studies, Society for Financial Studies, vol. 30(7), pages 2478-2522.

    More about this item

    Keywords

    Size Distribution of Firms; Labor Regulations; India;

    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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