Competition and Labor Productivity in India's Retail Stores

Author: Mohammad Amin
Source: The World Bank, August 2007

The paper analyzes the effect of product market competition on the average productivity of labor in India’s retail sector. The authors use a new dataset of 1,948 retail stores located in 41 cities of India compiled by the World Bank’s Enterprise surveys. According to the survey, 62% of the stores do not face any significant competition. The empirical analysis establishes a strong causal effect of competition on labor productivity of stores. Our estimates suggest an increase of 87% in labor productivity from pro-competitive reforms.

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