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The Impact of Firm Entry Regulation on Long-living Entrants

  • Susanne Prantl

    ()

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

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    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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    File URL: http://www.coll.mpg.de/pdf_dat/2010_30online.pdf
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    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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