Working Paper: NBER ID: w12031
Authors: 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.
Keywords: Liberalization; License Raj; Industrial Performance; Labor Market Institutions; India
JEL Codes: L10
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Delicensing reforms (L59) | Industrial performance (L69) |
| Labor market institutions (pro-employer) (J08) | Industrial performance (L69) |
| Labor market institutions (pro-worker) (J08) | Industrial performance (L69) |
| Delicensing reforms + Labor market institutions (pro-worker) (J08) | Industrial performance (L69) |
| Delicensing reforms + Labor market institutions (pro-employer) (J08) | Industrial performance (L69) |