The Distribution of Firm Size in India: What Can Survey Data Tell Us?

Rana Hasan and Karl Robert L. Jandoc
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Karl Robert L. Jandoc: Asian Development Bank

No 213, ADB Economics Working Paper Series from Asian Development Bank

Abstract: We use establishment-level data from Indian manufacturing to describe the distribution of firm size in terms of employment, and discuss implications for public policy. A unique feature of our analysis is the use of nationally representative establishment-level data from both the registered (formal) and unregistered (informal) components of the Indian manufacturing sector. We also examine how the distribution of firm size varies across states coded by recent literature as having either flexible or inflexible labor regulations. We find little difference in the size distribution of firms between states believed to have flexible labor regulations versus those with inflexible labor regulations. However, restricting attention to labor-intensive industries, we find a greater prevalence of larger-sized firms in states with flexible labor regulations. This suggests that labor regulations may indeed be affecting firm size adversely. More generally, our paper serves to illustrate the point that establishment-level survey data represent a very rich source for work on public policy issues.

Keywords: Size Distribution of Firms; Labor Regulations; India (search for similar items in EconPapers)
JEL-codes: J48 L11 L25 L60 O17 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2010-08
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0213

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