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  3. American Economic Review
  4. September 2008
  5. The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India

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

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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)

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

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JEL Classification

  • 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