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American Economic Review: Vol. 98 No. 4 (September 2008)

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

Article Citation

Aghion, Philippe, Robin Burgess, Stephen J. Redding, and Fabrizio Zilibotti. 2008. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India." American Economic Review, 98(4): 1397-1412.

DOI: 10.1257/aer.98.4.1397

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 pro-employer labor market institutions grew more quickly than those in pro-worker environments. (JEL J50, L52,L60, O14, O15, O25)

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Authors

Aghion, Philippe (Harvard U)
Burgess, Robin (London School of Economics)
Redding, Stephen J. (London School of Economics)
Zilibotti, Fabrizio (Institute for Empirical Research in Economics, U Zurich)

JEL Classifications

J50: Labor-Management Relations, Trade Unions, and Collective Bargaining: General
L52: Industrial Policy; Sectoral Planning Methods
L60: Industry Studies: Manufacturing: General
O14: Industrialization; Manufacturing and Service Industries; Choice of Technology
O15: Economic Development: Human Resources; Human Development; Income Distribution; Migration
O25: Industrial Policy


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