Measuring Regulation: A Labor Task-Based Approach

USC CLASS Research Papers Series No. CLASS19-22

USC Legal Studies Research Papers Series No. 19-22

52 Pages Posted: 30 Jun 2018 Last revised: 15 Aug 2019

See all articles by Michael Simkovic

Michael Simkovic

University of Southern California Gould School of Law; University of Southern California - Marshall School of Business

Miao Ben Zhang

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Date Written: July 1, 2019

Abstract

We study the economic impact of regulation through the response of the regulated entities. Using job task information for over 800 occupations and firm-level occupational employment and wage data, we measure the percentage of a firm's annual labor spending on performing regulation-related tasks. We show that the Sarbanes-Oxley Act substantially increased publicly-traded firms' spending on regulation-related tasks compared to privately-held firms matched based on state, industry and employment. By analyzing several industry-specific regulation shocks, we show that our response-based measure outperforms popular supply-side measures that count words of regulation in detecting the impact of regulation and distinguishing regulation from deregulation. Labor spending on regulation-related tasks appears to be a valuable yet under-explored approach to detect the intensity of regulation.

Keywords: Regulation, Deregulation, Dodd-Frank, Sarbanes-Oxley, Compliance, RegData, Regulatory Index

JEL Classification: D22, G28, G38, K2, L5

Suggested Citation

Simkovic, Michael and Zhang, Miao Ben, Measuring Regulation: A Labor Task-Based Approach (July 1, 2019). USC CLASS Research Papers Series No. CLASS19-22. Available at SSRN: https://ssrn.com/abstract=3205589 or http://dx.doi.org/10.2139/ssrn.3205589

Michael Simkovic (Contact Author)

University of Southern California Gould School of Law ( email )

699 Exposition Boulevard
Los Angeles, CA 90089
United States

University of Southern California - Marshall School of Business ( email )

701 Exposition Blvd
Los Angeles, CA 90089
United States

Miao Ben Zhang

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://www.MiaoBenZhang.com/

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