Place-based policies, structural change and female labor: Evidence from India’s Special Economic Zones

This paper quantifies the local economic impact of special economic zones (SEZs) established in India between 2005 and 2013. Using a novel dataset that combines census information on the universe of Indian firms with geo-referenced data on SEZs, we find that the establishment of SEZs increased local manufacturing and service employment, with positive spillovers up to 10 km from the SEZ area. The analysis shows that the gains in manufacturing and service employment were accompanied by a decline in agricultural labor, especially for women, suggesting that the policy contributed to structural change. In further analysis, we document that significant local employment effects occur across different types of SEZs: privately and publicly run zones, and SEZs with different industry designations. • We quantify the local economic impact of special economic zones in India. • The analysis combines georeferenced data on SEZ with census information. • SEZ establishment is found to increase local manufacturing and service employment. • Agricultural employment in SEZ areas declines, in particular for women. • Significant local employment effects emerge across different types of SEZs.