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Labor Regulations and the Cost of Corruption: Evidence from the Indian Firm Size Distribution

Amirapu, Amrit, Gechter, Michael (2020) Labor Regulations and the Cost of Corruption: Evidence from the Indian Firm Size Distribution. Review of Economics and Statistics, 102 (1). pp. 34-48. ISSN 0034-6535. E-ISSN 1530-9142. (doi:10.1162/rest_a_00837) (KAR id:69605)

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Abstract

In this paper we estimate the costs associated with an important suite of labor regulations in India by taking advantage of the fact that these regulations only apply to firms above a size threshold. Using distortions in the firm size distribution together with a structural model of firm size choice, we estimate that the regulations increase firms' unit Labour costs by 35%. This estimate is robust to potential misreporting on the part of Firms and enumerators. We also document a robust positive association between regulatory costs and exposure to corruption, which may explain why regulations appear to be so costly in developing countries.

Item Type: Article
DOI/Identification number: 10.1162/rest_a_00837
Subjects: H Social Sciences
Divisions: Faculties > Social Sciences > School of Economics
Depositing User: Amrit Amirapu
Date Deposited: 16 Oct 2018 15:18 UTC
Last Modified: 07 Apr 2020 14:23 UTC
Resource URI: https://kar.kent.ac.uk/id/eprint/69605 (The current URI for this page, for reference purposes)
Amirapu, Amrit: https://orcid.org/0000-0001-9922-9363
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