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Entry Regulation and Entrepreneurship: Empirical Evidence from a German Natural Experiment

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  • Davud Rostam-Afschar

Abstract

The amendment to the German Trade and Crafts Code in 2004 offers a natural experiment to asses the causal effects of this reform on the probabilities of being self-employed and transition into and out of self-employment, using cross-sections (2002-2006) of German microcensus data. This study applies the difference-in-differences technique in logit models for four occupational groups. Easing the educational entry requirement has fostered self-employment significantly for less qualified craftsmen, almost doubling the entry probability, even as exit rates remained unaffected. Weaker effects occur for other occupational groups. These findings have implications for the design of regulations with educational requirements.

Suggested Citation

  • Davud Rostam-Afschar, 2010. "Entry Regulation and Entrepreneurship: Empirical Evidence from a German Natural Experiment," Discussion Papers of DIW Berlin 1065, DIW Berlin, German Institute for Economic Research.
  • Handle: RePEc:diw:diwwpp:dp1065
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    References listed on IDEAS

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    More about this item

    Keywords

    Regulation; Entrepreneurship; Educational entry requirement; Natural experiment; Craftsmanship;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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