Journal of Development Economics (2011)
Abstract: We investigate the relationship between economic deregulation, skill upgrading, and wage inequality during the 1980s and 1990s in India. We use a unique dataset on India’s industrial licensing regime to test whether industrial deregulation during the 1980s and 1990s played a role in generating demand for skilled workers and in widening the skill-wage gap. Further, we examine the relationship between India’s external sector reforms during and after 1991 and skill upgrading.
World Bank Economic Review, May 2006, Volume 20, No. 2, pp. 241-259.
Abstract: Preferential trade arrangements should be evaluated by their effect on prices rather than by their effect on the total value of trade. This point is emphasized in the theoretical literature but rarely implemented empirically. This article analyzes the U.S. Caribbean Basin Initiative’s ( ’s) impact on the prices received by eligible apparel exporters. TheA fixed-effects generalized least squares (’s apparel preferences are the most important and heavily used unilateral preferences because of high trade barriers imposed on exports from the rest of the world. ) estimation is used to isolate the effects of other factors (such as quality, exchange rates, and transaction costs) and to identify the effects of tariff preferences. exporters capture only about two-thirds of their preference margin despite the high degree of competition among importers. This translates into a 9 percent increase in the relative prices they receive, with some variance across countries and years. Countries specializing in higher value items capture more of the preference margin, and the implementation of the North American Free Trade Agreement (fibre Arrangement quotas significantly lowers the benefits of ) has a negative effect. Removing Multi-preferences.
Abstract: This paper investigates the determinants of spatial concentration and entry within manufacturing across states in India. Using an unbalanced panel of 180 industries spread across 16 major Indian states over the time period 1985-2007, we estimate the effect of location (state) characteristics interacted with characteristics that make industries naturally more prone to concentrate in locations (states) of certain types on spatial concentration and entry. The results show that governance, infrastructure and the availability of skilled labor are important determinants of increased concentration and entry. Moreover, the estimates indicate that state characteristics associated with lower distance to foreign markets, lower costs of accessing domestic suppliers, or lower costs of doing business matter for the impact of licensing, FDI and trade reforms on concentration and new entry. There is also evidence that less substitutable inputs (e.g., roads) raise spatial concentration while more substitutable inputs (e.g., electricity) do not.
Using data on formal manufacturing plants in India, we report a large but imprecise acceleration in productivity growth starting around the mid-1990s (e.g. 1993-2004 compared to 1980-1992). We trace the acceleration to productivity growth within large plants (200 workers or more), as opposed to reallocation across such plants. As many economists believe Indian reforms during this era improved resource allocation, the absence of a growth pickup from reallocation is surprising. Moreover, when we look across industries we fail to robustly relate productivity growth to prominent reforms such as industrial de-licensing, tariff reductions, FDI liberalization, or lifting of small-scale industry reservations. Even under a generous reading of their effects, these reforms (at least as we measure them) seem to account for less than one-quarter of overall productivity growth.
We use plant-level data from India for the period 1980-99 to examine the impact of industrial and trade policy reforms on the geographic agglomeration of manufacturing industries measured by the Ellison and Glaesar (1997) index (EG index). . First, we find that, after controlling for standard determinants of agglomeration, a standard deviation in the proportion of output de-licensed or FDI-liberalized reduced the EG index by 22% and 6% respectively while trade reforms had no significant effect. Secondly, the response of agglomeration to various mechanisms exhibits significant plant size-based differences. Trade liberalization significantly reduced concentration for large plants , while there was no impact for medium and small plants. De-licensing increased spatial concentration of medium and large plants and reduced agglomeration of small plants. FDI deregulation caused large plants to agglomerate and small plants to disperse. Our results are robust to the use of FGLS techniques to correct for heteroskedasticity and to the control for persistence in the agglomeration process as well as to a wide variety of fixed effects and specification tests.
Abstract: We examine the relationship between crime and inequality in Indian districts in 1988 and 2004. We find that inequality increases most types of property and violent crime and that inequality within religious and caste groups drive this relationship. Our results are robust to district fixed effects as well as to controls for the costs and benefits of criminal activity. We then use geographically weighted regressions to estimate local models of the relationship between crime and inequality across Indian districts. Our results show a divergence in the magnitude and statistical significance of the inequality coefficient in global and local models. In addition, there exists substantial spatial variation in the correlation between both property and violent crime and inequality, which supports the need for spatial analysis. Global and local models reveal a weakening relationship between all types of crime and inequality in 2004 compared to 1988, which may be due to declining crime levels or inter-temporal variation in the underreporting of crime.
Abstract: We investigate the link between industrial deregulation, trade reform and unit-level productivity using two unique microeconomic data sets from India. We use disaggregated data on the dismantling of the the “License Raj” in India (operating from the 1950s onwards) and find that removal of microeconomic constraints (that accompanied a license to produce) as well a rise in the threat of potential entry raised output per worker by 8.5%-17%. We also exploit the chronology of reforms in India and find that industries and firms that were de-licensed in the 1980s tend to perform better vis productivity after trade liberalization in 1991. We use an administrative requirement of the “Licensing Raj” to identify the impact of de-licensing –size-based exemption from licensing requirements. This institutional feature provides within-industry variation as well as a specification test – we conduct the analysis for hypothetical thresholds (that is, we falsely assign firms to the treatment) and find that there is no size-based response to de-licensing around these artificial thresholds. We also create a psuedo-panel of firms and find that our results are robust to firm-fixed effects.