BEGIN:VCALENDAR VERSION:2.0 METHOD:PUBLISH PRODID:-//Telerik Inc.//Sitefinity CMS 15.1//EN BEGIN:VTIMEZONE TZID:Eastern Standard Time BEGIN:STANDARD DTSTART:20251102T020000 RRULE:FREQ=YEARLY;BYDAY=1SU;BYHOUR=2;BYMINUTE=0;BYMONTH=11 TZNAME:Eastern Standard Time TZOFFSETFROM:-0400 TZOFFSETTO:-0500 END:STANDARD BEGIN:DAYLIGHT DTSTART:20250301T020000 RRULE:FREQ=YEARLY;BYDAY=2SU;BYHOUR=2;BYMINUTE=0;BYMONTH=3 TZNAME:Eastern Daylight Time TZOFFSETFROM:-0500 TZOFFSETTO:-0400 END:DAYLIGHT END:VTIMEZONE BEGIN:VEVENT DESCRIPTION:The Moynihan Institute’s program for Trade\, Development and Po litical Economy welcomes \;Shoumitro Chatterjee from \;Johns Hopki ns University.Abstract: This paper identifies exit barriers as a new reaso n for India’s underdeveloped manufacturing sector. These barriers not only deter entry but also trap resources in unproductive firms. We document th at Indian institutions generate such barriers and provide causal evidence of their effects. Using a dynamic model that separately identifies direct exit barriers from labor and capital adjustment costs\, we f ind that exit barriers are quantitatively significant\, particularly in low-performing states and labor-intensive industries. Our analysis yields three findings. First\, reducing firing costs raises value added but reduces employment\, whereas relaxing direct exit barriers increases both. Second\, simultaneo us reform of labor firing costs and direct exit barriers yields synergies. Third\, sequencing matters: addressing direct exit barriers before labor firing costs preserves employment while improving efficiency. Finally\, we show that exit subsidies are more effective at raising value added\, whil e entry subsidies are more effective at increasing employment.Co-authors:K ala Krishna - kmk4@psu.eduDepartment of Economics\, The Pennsylvania State University and NBER Kalyani Padmakumar - kpadmakumar@fsu.edu Department o f Economics\, Florida State University Yingyan Zhao: yingyan_zhao@gwu.eduD epartment of Economics and the Elliot School of International Affairs\, Ge orge Washington UniversityShoumitro Chatterjee \;is an assistant profe ssor of international economics. He is a research affiliate at the Centre for Economic Policy Research and a visiting scholar at the Carnegie Endowm ent for International Peace and the Indian Council for Research on Interna tional Economic Relations.His research lies at the intersection of interna tional trade\, globalization\, and macro-development\, with a particular f ocus on the role of agriculture in economic development. His academic work has been published in leading journals\, including the \;American Eco nomic Review \;and the \;Quarterly Journal of Economics.Chatterjee received a Ph.D. in economics from Princeton University in 2018 and was a n INET Postdoctoral Fellow at the University of Cambridge during 2018–19. He earned a B.A. in economics from St. Stephen’s College in 2009\, followe d by an M.A. in economics from the Delhi School of Economics in 2011.Prior to joining Johns Hopkins\, he held faculty positions at Pennsylvania Stat e University and Georgetown University. He also served as an economist in the Office of the Chief Economic Adviser\, Government of India\, during 20 15–16.He is the recipient of the International Economics Research Annual A ward from EXIM Bank of India (2019) and was recognized by \;ThePrint&n bsp\;in 2024 as one of India’s leading economic thinkers of the next decad e. DTEND:20260420T210500Z DTSTAMP:20260510T040122Z DTSTART:20260420T194500Z LOCATION: SEQUENCE:0 SUMMARY:Shoumitro Chatterjee | No Country for Dying Firms: Evidence from In dia UID:RFCALITEM639139680826552112 X-ALT-DESC;FMTTYPE=text/html:

The Moynihan Institute’s program for Trade\ , Development and Political Economy welcomes \;Shoumitro Chatterjee from \;Johns Hopkins University.

Abstract: This paper identifies e xit barriers as a new reason for India’s underdeveloped manufacturing sect or. These barriers not only deter entry but also trap resources in unprodu ctive firms. We document that Indian institutions generate such barriers a nd provide causal evidence of their effects. Using a dynamic model that se parately identifies direct exit barriers from labor and capital adjustment costs\, we f ind that exit barriers are quantitatively significant\, part icularly in low-performing states and labor-intensive industries. Our anal ysis yields three findings. First\, reducing firing costs raises value add ed but reduces employment\, whereas relaxing direct exit barriers increase s both. Second\, simultaneous reform of labor firing costs and direct exit barriers yields synergies. Third\, sequencing matters: addressing direct exit barriers before labor firing costs preserves employment while improvi ng efficiency. Finally\, we show that exit subsidies are more effective at raising value added\, while entry subsidies are more effective at increas ing employment.

Co-authors:

Kala Krishna - kmk4@psu.ed u
Department of Economics\, The Pennsylvania State University and NBER

Kalyani Padmakumar - kpadmakumar@fsu.edu

Department of Economics\, Florida State University

Y ingyan Zhao: yingyan_zhao@gwu.edu

Department of Economics a nd the Elliot School of International Affairs\, George Washington Universi ty

Shoumit ro Chatterjee \;is an assistant professor of internation al economics. He is a research affiliate at the Centre for Economic Policy Research and a visiting scholar at the Carnegie Endowment for Internation al Peace and the Indian Council for Research on International Economic Rel ations.

His research lies at the intersection of internationa l trade\, globalization\, and macro-development\, with a particular focus on the role of agriculture in economic development. His academic work has been published in leading journals\, including the \;American Econ omic Review \;and the \;Quarterly Journal of Economics.

Chatterjee received a Ph.D. in economics from Princeton Univers ity in 2018 and was an INET Postdoctoral Fellow at the University of Cambr idge during 2018–19. He earned a B.A. in economics from St. Stephen’s Coll ege in 2009\, followed by an M.A. in economics from the Delhi School of Ec onomics in 2011.

Prior to joining Johns Hopkins\, he held faculty p ositions at Pennsylvania State University and Georgetown University. He al so served as an economist in the Office of the Chief Economic Adviser\, Go vernment of India\, during 2015–16.

He is the recipient of the Inte rnational Economics Research Annual Award from EXIM Bank of India (2019) a nd was recognized by \;ThePrint \;in 2024 as one of India ’s leading economic thinkers of the next decade.

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