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

34 Pages Posted: 23 Sep 2010

See all articles by Rana Hasan

Rana Hasan

Asian Development Bank; University of Maryland - Department of Economics

Karl Robert Jandoc

Asian Development Bank

Date Written: August 2010

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.

Keywords: Size Distribution of Firms, Labor Regulations, India

JEL Classification: L11, L25, L60, O17, J48

Suggested Citation

Hasan, Rana and Jandoc, Karl Robert, The Distribution of Firm Size in India: What Can Survey Data Tell Us? (August 2010). Asian Development Bank Economics Working Paper Series No. 213. Available at SSRN: https://ssrn.com/abstract=1681268 or http://dx.doi.org/10.2139/ssrn.1681268

Rana Hasan (Contact Author)

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

University of Maryland - Department of Economics ( email )

College Park, MD 20742
United States
808-944-7590 (Phone)
808-944-7399 (Fax)

Karl Robert Jandoc

Asian Development Bank ( email )

6 ADB Avenue, Mandaluyong City 1550
Metro Manila
Philippines

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