STEG Working Paper • Research Theme 1: Firms, Frictions and Spillovers, and Industrial Policy, Research Theme 4: Trade and Spatial Frictions

Place-based Policies, Structural Change and Female Labor: Evidence from India’s Special Economic Zones

Johannes Gallé, Daniel Overbeck, Nadine Riedel, Tobias Seidel

WP040 GalleOverbeckRiedelSeidel PlaceBasedPoliciesStructuralChangeAndFemaleLabor REVMar23.pdf

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This paper quantifies the local economic impact of Special Economic Zones (SEZs) that were established in India between 2005-2013. Based on a novel data set that combines census data on the universe of Indian firms with georeferenced data on SEZs, we find that SEZs increased manufacturing and service employment with positive spillover effects up to 10km. This employment gain was paralleled by a decline in local agricultural employment, in particular of women, suggesting that the policy contributed to structural change. We find no evidence for heterogeneous effects between privately and publicly run SEZs or zones with different industry denominations.

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