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The unequal effects of liberalization: evidence from dismantling the License Raj in India

Aghion, Philippe and Burgess, Robin and Redding, Stephen and Zilibotti, Fabrizio (2006) The unequal effects of liberalization: evidence from dismantling the License Raj in India. 728. Centre for Economic Performance, London School of Economics and Political Science, London, UK.

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Identification Number: 728


This paper investigates whether the effects, on registered manufacturing out-put, employment, entry and investment, 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 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. Our results emphasize how local institutions matter for whether industry in a region benefits or is harmed by the nationwide delicensing reform.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 2006 the authors
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Research centres and groups > Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD)
Departments > Economics
Date Deposited: 10 Mar 2008 11:34
Last Modified: 03 Jan 2012 09:08

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