Entry Regulation and Business Start-Ups: Evidence from Mexico

Abstract:     
We estimate the effect on business start-ups of a program that significantly speeds up firm registration procedures. The program was implemented in Mexico in different municipalities at different dates. Our estimates suggest that new start-ups increased by about 4% in eligible industries, and we present evidence that this is a causal effect. Most of the effect is temporary, concentrated in the first 10 months after implementation. The effect is robust to several specifications of the benchmark control group time trends. We find that the program was more effective in municipalities with less corruption and cheaper additional procedures.

Number of Pages in PDF File: 41

Keywords: Firm Start-Ups, Regulation, Informal Sector, Program Evaluation

working papers series