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

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  • Philippe Aghion
  • Robin Burgess
  • Stephen Redding
  • Fabrizio Zilibotti

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

  • Philippe Aghion & Robin Burgess & Stephen Redding & Fabrizio Zilibotti, 2006. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India," NBER Working Papers 12031, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:12031
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    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General

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