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

See all articles by Philippe Aghion

Philippe Aghion

College de France and London School of Economics and Political Science, Fellow; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Robin Burgess

London School of Economics (LSE) - Department of Economics; Centre for Economic Policy Research (CEPR); National Bureau of Economic Research (NBER)

Stephen J. Redding

Princeton University

Fabrizio Zilibotti

University of Zurich; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 4 versions of this paper

Date Written: December 2007

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.

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

JEL Classification: J52, L11, L52, O14, O24, O47, O53, P41

Suggested Citation

Aghion, Philippe and Burgess, Robin and Redding, Stephen J. and Zilibotti, Fabrizio, The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India (December 2007). University of Zurich Institute for Empirical Research in Economics Working Paper No. 345. Available at SSRN: https://ssrn.com/abstract=1076162 or http://dx.doi.org/10.2139/ssrn.1076162

Philippe Aghion (Contact Author)

College de France and London School of Economics and Political Science, Fellow ( email )

London
United Kingdom

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Robin Burgess

London School of Economics (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://econ.lse.ac.uk/staff/rburgess/index_own.html

Centre for Economic Policy Research (CEPR)

London
United Kingdom

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stephen J. Redding

Princeton University ( email )

Princeton, NJ 08544-1021
United States

HOME PAGE: http://www.princeton.edu/~reddings/

Fabrizio Zilibotti

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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