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A large carrier-induced index change is reported for conventional 8 Â¿m-stripe oxide-isolated AlGaAs double-heterostructure lasers. At threshold, the index change of the active layer is Â¿0.05 to Â¿0.07, which is a factor of 5 to 10 larger than previously reported. It is accompanied by an even greater change in dispersion. These effects cannot be explained by a free-carrier effect, and are most likely caused by a carrier-induced shift of the absorption edge.