Abstract
Every economic theory of secession predicts that a region chooses to secede if it expects to benefit. Yet this basic prediction remains untested. I use a novel approach --- a spatial difference-in-discontinuities --- to measure the benefits created by three new state borders drawn within India. Secession raised output in two of the three states, in one case by an average of 22 percent over the 11 years after secession. The sole state for which I detect no benefit is also the state least well described by any economic theory of secession.
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