The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India
University of Zurich Institute for Empirical Research in Economics Working Paper No. 345
34 Pages Posted: 18 Dec 2007
Date Written: December 2007
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.
Keywords: Distance to frontier, India, Industrial policy, Financial development, Labor regulation, Liberalization, Manufacturing, Reform
JEL Classification: J52, L11, L52, O14, O24, O47, O53, P41
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