TY - JOUR
T1 - Labor regulations and the cost of corruption
T2 - Evidence from the indian firm size distribution
AU - Amirapu, Amrit
AU - Gechter, Michael
N1 - Publisher Copyright:
© 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.
PY - 2020/3/1
Y1 - 2020/3/1
N2 - 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 apply only 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 labor 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.
AB - 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 apply only 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 labor 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.
UR - https://www.scopus.com/pages/publications/85080121884
UR - https://www.scopus.com/inward/citedby.url?scp=85080121884&partnerID=8YFLogxK
U2 - 10.1162/rest_a_00837
DO - 10.1162/rest_a_00837
M3 - Article
AN - SCOPUS:85080121884
SN - 0034-6535
VL - 102
SP - 34
EP - 48
JO - Review of Economics and Statistics
JF - Review of Economics and Statistics
IS - 1
ER -