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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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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: Divisions > Division of Human and Social Sciences > School of Economics
Depositing User: Amrit Amirapu
Date Deposited: 16 Oct 2018 15:18 UTC
Last Modified: 15 Sep 2021 15:23 UTC
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