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

Aghion, Philippe; Burgess, Robin; Redding, Stephen J.; Zilibotti, Fabrizio

Download This Paper

Open PDF in Browser

Add Paper to My Library

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

NBER Working Paper No. w12031

44 Pages Posted: 4 May 2006 Last revised: 17 Nov 2022

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)

Fabrizio Zilibotti

Centre for Economic Policy Research (CEPR); Yale University

There are 4 versions of this paper

Date Written: February 2006

Abstract

We study the effects of the progressive elimination of the system of industrial regulations on entry and production, known as the "license raj," on registered manufacturing output, employment, entry and investment 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.

Suggested Citation: Suggested Citation

Aghion, Philippe and Burgess, Robin and Redding, Stephen J. and Zilibotti, Fabrizio and Zilibotti, Fabrizio, The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India (February 2006). NBER Working Paper No. w12031, Available at SSRN: https://ssrn.com/abstract=883080