NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

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

Philippe Aghion, Robin Burgess, Stephen Redding, Fabrizio Zilibotti

NBER Working Paper No. 12031
Issued in February 2006
NBER Program(s):   EFG

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.

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Document Object Identifier (DOI): 10.3386/w12031

Published: Aghion P, Burgess R, Redding S and Zilibotti F. "The Unequal Effects of Liberalization: Evidence from Dismantling the License Raj in India." American Economic Review 94, 4 (2008): 1397-1412.

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