The Role of Regulation on Entry: Evidence from the Italian Provinces
46 Pages Posted: 22 Nov 2013
Date Written: September 20, 2013
This paper studies the effects of differences in local administrative burdens in Italy in the years preceding a major reform that sped up firm registration procedures. Combining regulatory data from a survey on Italian provinces before the reform (costs and time to start a business) with industry-level entry rates of limited liability firms, I explore the effects of regulatory barriers on entry across industries with different natural propensities to enter the market. Using different specifications the estimates show that lengthier and, to some extent, more costly procedures reduced the entry rate of limited liability firms in sectors with naturally high entry rates. These results also hold when I include measures of local financial development and of efficiency of bankruptcy procedures. Overall, the analysis confirms the view that administrative burdens on new start-ups matter for business creation.
Keywords: entry regulation, entrepreneurship, doing business
JEL Classification: G18, G38, L51, M13
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