Heterogeneity in the Effect of Regulation on Entrepreneurship and Entry Size

13 Pages Posted: 17 Nov 2009 Last revised: 19 Nov 2009

See all articles by Silvia Ardagna

Silvia Ardagna

National Bureau of Economic Research (NBER); Goldman Sachs - London

Annamaria Lusardi

George Washington University - Department of Accountancy; National Bureau of Economic Research (NBER)

Date Written: November 2009

Abstract

We use cross-national harmonized micro data from a broad sample of developed and developing countries and investigate the heterogeneity of the effect of entry, contract enforcement regulation, and financial development on both the decision to become an entrepreneur and the level of employment of newly created businesses. We focus on the interaction between the level of regulation and financial development and some individual characteristics that are important determinants of entrepreneurship, such as gender, business skills, and social networks. We find that entry regulation moderates the effect of business skills, while accentuating the effect of gender, even after accounting for the level of financial development. Specifically, women are more likely to enter into entrepreneurship in countries with higher levels of entry regulation, but mainly because they cannot find better work. This effect is also more pronounced in countries that are less financially developed. Furthermore, individuals who report having business skills are less likely to enter entrepreneurship in countries with higher entry regulation. Finally, we also find that individuals who know other entrepreneurs are less likely to start large businesses in countries with higher levels of entry and contract enforcement regulation.

Suggested Citation

Ardagna, Silvia and Lusardi, Annamaria, Heterogeneity in the Effect of Regulation on Entrepreneurship and Entry Size (November 2009). NBER Working Paper No. w15510. Available at SSRN: https://ssrn.com/abstract=1505833

Silvia Ardagna (Contact Author)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Goldman Sachs - London ( email )

130 Peterborough Court
133 Fleet Street
London, EC4A 2BB
United Kingdom

Annamaria Lusardi

George Washington University - Department of Accountancy ( email )

George Washington University School of Business
Washington, DC 20052
United States

HOME PAGE: http://business.gwu.edu/profiles/annamaria-lusardi/

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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