Labor Regulations and the Cost of Corruption: Evidence from the Indian Firm Size Distribution
In this paper, we estimate the costs associated with a suite of labor regulations in India whose components have gone largely unstudied in developing countries. We take advantage of the fact that these regulations only apply to firms above a size threshold. Using distortions in the firm size distribution at the threshold together with a structural model of firm size choice, we estimate that the regulations increase firms’ unit labor costs by 35%. We 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.

Written with Michael Gechter (Pennsylvania State University)
Date: 7 February 2018, 12:30 (Wednesday, 4th week, Hilary 2018)
Venue: Manor Road Building, Manor Road OX1 3UQ
Venue Details: Lecture Theatre
Speaker: Amrit Amirapu (University of Kent)
Organising department: Department of Economics
Organisers: Amma Panin (Nuffield College), Rossa O'Keeffe-O'Donovan (Nuffield College), Michael Koelle (Pembroke College)
Organiser contact email address: suzanne.george@economics.ox.ac.uk
Part of: CSAE Lunchtime Seminars
Booking required?: Not required
Audience: Public
Editors: Julia Coffey, Anne Pouliquen, Suzanne George