The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

47 Pages Posted: 30 Apr 2008

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)

Stephen J. Redding

Princeton University

F. Zilibotti

affiliation not provided to SSRN

Multiple version iconThere are 4 versions of this paper

Date Written: December 2005

Abstract

This paper investigates whether the effects, on registered manufacturing out-put, employment, entry and investment, 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 depending on the institutional environment in which industries are embedded. In particular, following delicensing, industries located in states with pro-employer labor market institutions grew more quickly than those in pro-worker environments. Our results emphasize how local institutions matter for whether industry in a region benefits or is harmed by the nationwide delicensing reform.

Suggested Citation

Aghion, Philippe and Redding, Stephen J. and Zilibotti, F., The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India (December 2005). , Vol. , pp. -, 2005. Available at SSRN: https://ssrn.com/abstract=1127014

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

Stephen J. Redding

Princeton University ( email )

Princeton, NJ 08544-1021
United States

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

F. Zilibotti

affiliation not provided to SSRN

No Address Available

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