Regulatory costs on entrepreneurship and establishment employment size
In this article, we examine how the level of regulation affects the size distribution of businesses. To the extent that regulation functions as a fixed cost, it should lead to larger firm size. However, regulations may also lead to smaller establishments with firms outsourcing regulated activities or staying small to take advantage of state exemptions for small businesses from regulations. We empirically examine the relationship between the size distribution of establishments and the level of regulation using state- and industry-level panel data from 1992 to 2004. Our results suggest that regulation decreases the proportion of zero employee and 1–4 employee establishments. The proportion of establishments in the 5–9 employee range generally increases with the level of regulation. Thus, regulation appears to operate as a fixed cost causing establishments to be larger. Copyright Springer Science+Business Media New York 2014
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Djankov, Simeon & La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei, 2001.
"The Regulation of Entry,"
Working Paper Series
rwp01-015, Harvard University, John F. Kennedy School of Government.
- Simeon Djankov & Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer, . "The Regulation of Entry," Working Paper 19462, Harvard University OpenScholar.
- Djankov, Simeon & La Porta, Rafael & Shleifer, Andrei & Lopez de Silanes, Florencio, 2001. "The regulation of entry," Policy Research Working Paper Series 2661, The World Bank.
- Djankov, Simeon & La Porta, Rafael & López-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," CEPR Discussion Papers 2953, C.E.P.R. Discussion Papers.
- Simeon Djankov & Rafael La Porta & Florencio LopezdeSilanes & Andrei Shleifer, 2000. "The Regulation of Entry," NBER Working Papers 7892, National Bureau of Economic Research, Inc.
- Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andre Shleifer, 2000. "The Regulation of Entry," Harvard Institute of Economic Research Working Papers 1904, Harvard - Institute of Economic Research.
- Kristina Nyström, 2008.
"The institutions of economic freedom and entrepreneurship: evidence from panel data,"
Springer, vol. 136(3), pages 269-282, September.
- Nyström, Kristina, 2008. "The Institutions of Economic Freedom and Entrepreneurship: Evidence from Panel Data," Ratio Working Papers 114, The Ratio Institute.
- Casey B. Mulligan & Andrei Shleifer, 2005. "The Extent of the Market and the Supply of Regulation," The Quarterly Journal of Economics, Oxford University Press, vol. 120(4), pages 1445-1473.
- Sobel, Russell S., 2008.
"Testing Baumol: Institutional quality and the productivity of entrepreneurship,"
Journal of Business Venturing,
Elsevier, vol. 23(6), pages 641-655, November.
- Russell S. Sobel, 2006. "Testing Baumol: Institutional Quality and the Productivity of Entrepreneurship," Working Papers 06-06 Classification-, Department of Economics, West Virginia University.
- Henrekson, Magnus & Johansson, Dan, 1999.
"Institutional Effects on the Evolution of the Size Distribution of Firms,"
Small Business Economics,
Springer, vol. 12(1), pages 11-23, February.
- Henrekson, Magnus & Johansson, Dan, 1998. "Institutional Effects on the Evolution of the Size Distribution of Firms," Working Paper Series 497, Research Institute of Industrial Economics.
- Weingast, Barry R & Shepsle, Kenneth A & Johnsen, Christopher, 1981. "The Political Economy of Benefits and Costs: A Neoclassical Approach to Distributive Politics," Journal of Political Economy, University of Chicago Press, vol. 89(4), pages 642-64, August.
- Patrizio Pagano & Fabiano Schivardi, 2001.
"Firm Size Distribution and Growth,"
Temi di discussione (Economic working papers)
394, Bank of Italy, Economic Research and International Relations Area.
- Noel D. Campbell & Kirk C. Heriot & Andres Jauregui, 2010. "State Regulatory Spending: Boon or Brake for New Enterprise Creation and Income?," Economic Development Quarterly, , vol. 24(3), pages 243-250, August.
- Robert W. Crandall & Clifford Winston, 2005.
"Does antitrust policy improve consumer welfare? Assessing the evidence,"
in: Governments, Competition and Utility Regulation, chapter 2
Edward Elgar Publishing.
- Robert W. Crandall & Clifford Winston, 2003. "Does Antitrust Policy Improve Consumer Welfare? Assessing the Evidence," Journal of Economic Perspectives, American Economic Association, vol. 17(4), pages 3-26, Fall.
- Silvia Ardagna & Annamaria Lusardi, 2008.
"Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints,"
NBER Working Papers
14012, National Bureau of Economic Research, Inc.
- Silvia Ardagna & Annamaria Lusardi, 2010. "Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints," NBER Chapters, in: International Differences in Entrepreneurship, pages 17-62 National Bureau of Economic Research, Inc.
- Davidson, Russell & MacKinnon, James G., 1993. "Estimation and Inference in Econometrics," OUP Catalogue, Oxford University Press, number 9780195060119, May.
- Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
- Lacy Glenn Thomas, 1990. "Regulation and Firm Size: FDA Impacts on Innovation," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 497-517, Winter.
- Klapper, Leora & Laeven, Luc & Rajan, Raghuram, 2006. "Entry regulation as a barrier to entrepreneurship," Journal of Financial Economics, Elsevier, vol. 82(3), pages 591-629, December.
- Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, vol. 98(5), pages 893-921, October.
When requesting a correction, please mention this item's handle: RePEc:kap:sbusec:v:42:y:2014:i:3:p:541-559. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If references are entirely missing, you can add them using this form.