Measuring the Aggregate Effects of Simplifying Firm Creation in Italy

21 Pages Posted: 15 Feb 2017  

Date Written: November 24, 2016

Abstract

A series of reforms passed in Italy in 2010 reduced the expected duration of registration and startup procedures for new businesses. Previous research has found that procedural simplifications of this nature have a positive impact on the selection of firm entry in the short run and consequently on their productive outcomes. These studies, based on natural policy experiments and lacking precise estimates for the duration of the startup process in Italy, are not designed to predict both the long run effects and the aggregate implications of such reforms. Using a general equilibrium framework with heterogeneous firms and households, and micro-level data on Italian households, I provide an estimate for the average startup times in Italy and find that further reforms of similar nature could produce a significant increase in aggregate firm productivity and output — qualitatively in line with previous findings.

Keywords: firm size distribution, entrepreneurial selection, entry costs, aggregate productivity

JEL Classification: E22, E23, E65, K23

Suggested Citation

Gonzalez-Torres, Guzman, Measuring the Aggregate Effects of Simplifying Firm Creation in Italy (November 24, 2016). Bank of Italy Occasional Paper No. 365. Available at SSRN: https://ssrn.com/abstract=2917182 or http://dx.doi.org/10.2139/ssrn.2917182

Guzman Gonzalez-Torres (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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