The Responsiveness of Entrepreneurs to Working Time Regulations

Small Business Economics, Vol. 32, No. 3, pp. 259-276

Posted: 16 May 2011

See all articles by Frank Stephen

Frank Stephen

School of Law, University of Manchester

David Urbano

Autonomous University of Barcelona

Stefan van Hemmen-Almazor

Autonomous University Barcelona (UAB)

Abstract

In this article, we analyse the impact of enforcement practices (proxied by judicial formalism) and the regulation of working time on entrepreneurial activity by opportunity. We find that higher enforcement formalism mitigates the negative impact exerted by rigid working time regulations on the number of entrepreneurs. While it is agreed that regulatory rigidities may increase labour transaction costs, we show that entrepreneurs are less sensitive to labour regulations the higher the level of enforcement formalism in which they operate. Higher formalism is associated with lower enforcing efficiency and lower probability of being punished for transgressing laws. A policy implication is that encouraging labour flexibility might not improve conditions for entrepreneurial activity in procedurally formalist countries. This is due to the fact that, in those countries, flexibility de facto characterises employment relations, no matter what the law says.

Keywords: Judicial Formalism, Observance, Compliance, Entrepreneur, Labour contracts, Rigidity of hours, Working time, Opportunity entrepreneurship, GEM

JEL Classification: L26, J83, K31, K42

Suggested Citation

Stephen, Frank H. and Urbano, David and van Hemmen, Stefan, The Responsiveness of Entrepreneurs to Working Time Regulations. Small Business Economics, Vol. 32, No. 3, pp. 259-276, Available at SSRN: https://ssrn.com/abstract=1837240

Frank H. Stephen

School of Law, University of Manchester ( email )

Oxford Road
Manchester M13 9PL, M139PL
Great Britain

David Urbano (Contact Author)

Autonomous University of Barcelona ( email )

Edifici B, Campus UAB
Bellaterra, Barcelona 08193
Spain
34935811209 (Phone)

HOME PAGE: http://www.davidurbano.eu

Stefan Van Hemmen

Autonomous University Barcelona (UAB) ( email )

Plaça Cívica
Cerdañola del Valles
Barcelona, Barcelona 08193
SPAIN
+93 581 12 09 (Phone)
+93 581 25 55 (Fax)

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