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The Impact of Firm Entry Regulation on Long-living Entrants

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  • Susanne Prantl

    () (Max Planck Institute for Research on Collective Goods, Bonn)

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    Abstract

    What is the impact of firm entry regulation on sustained entry into self-employment? How does firm entry regulation influence the performance of long-living entrants? In this paper, I address these questions by exploiting a natural experiment in firm entry regulation. After German reunification, East and West Germany faced different economic conditions, but fell under the same law that imposes a substantial mandatory standard on entrepreneurs who want to start a legally independent firm in one of the regulated occupations. The empirical results suggest that the entry regulation suppresses long-living entrants, not only entrants in general or transient, short-lived entrants. This effect on the number of long-living entrants is not accompanied by a counteracting effect on the performance of long-living entrants, as measured by firm size several years after entry.

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    Bibliographic Info

    Paper provided by Max Planck Institute for Research on Collective Goods in its series Working Paper Series of the Max Planck Institute for Research on Collective Goods with number 2010_30.

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    Date of creation: Jul 2010
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    Handle: RePEc:mpg:wpaper:2010_30

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    Keywords: Firm entry regulation; sustained entry; self-employment; firm size;

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