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Heterogeneity in the effect of regulation on entrepreneurship and entry size

  • Silvia Ardagna
  • Annamaria Lusardi

We use cross-national harmonized micro data from a broad sample of developed and developing countries and investigate the heterogeneity of the effect of entry, contract enforcement regulation, and financial development on both the decision to become an entrepreneur and the level of employment of newly created businesses. We focus on the interaction between the level of regulation and financial development and some individual characteristics that are important determinants of entrepreneurship, such as gender, business skills, and social networks. We find that entry regulation moderates the effect of business skills, while accentuating the effect of gender, even after accounting for the level of financial development. Specifically, women are more likely to enter into entrepreneurship in countries with higher levels of entry regulation, but mainly because they cannot find better work. This effect is also more pronounced in countries that are less financially developed. Furthermore, individuals who report having business skills are less likely to enter entrepreneurship in countries with higher entry regulation. Finally, we also find that individuals who know other entrepreneurs are less likely to start large businesses in countries with higher levels of entry and contract enforcement regulation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 15510.

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Date of creation: Nov 2009
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Publication status: published as "Heterogeneity in the Effect of Regulation on Ent repreneurship and Entry Size , " with Si lvia Ardagna, Journal of the European Economic Ass ociation Papers and Proceedings , 2010 .
Handle: RePEc:nbr:nberwo:15510
Note: AG
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  1. repec:dgr:kubcen:200972 is not listed on IDEAS
  2. Minniti, Maria, 2005. "Entrepreneurship and network externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 57(1), pages 1-27, May.
  3. Kerr, William R. & Nanda, Ramana, 2009. "Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship," Journal of Financial Economics, Elsevier, vol. 94(1), pages 124-149, October.
  4. Josh Lerner & Antoinette Schoar, 2010. "International Differences in Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number lern08-2, October.
  5. William R. Kerr & Ramana Nanda, 2009. "Banking Deregulations, Financing Constraints and Firm Entry Size," Harvard Business School Working Papers 10-010, Harvard Business School, revised Oct 2009.
  6. repec:ner:tilbur:urn:nbn:nl:ui:12-3607199 is not listed on IDEAS
  7. Mihir Desai & Paul Gompers & Josh Lerner, 2003. "Institutions, Capital Constraints and Entrepreneurial Firm Dynamics: Evidence from Europe," NBER Working Papers 10165, National Bureau of Economic Research, Inc.
  8. Da Rin, Marco & Di Giacomo, Marina & Sembenelli, Alessandro, 2011. "Entrepreneurship, firm entry, and the taxation of corporate income: Evidence from Europe," Journal of Public Economics, Elsevier, vol. 95(9), pages 1048-1066.
  9. Ciccone, Antonio & Papaioannou, Elias, 2006. "Red Tape and Delayed Entry," CEPR Discussion Papers 5996, C.E.P.R. Discussion Papers.
  10. Edward L. Glaeser & William R. Kerr, 2008. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," NBER Working Papers 14407, National Bureau of Economic Research, Inc.
  11. Silvia Ardagna & Annamaria Lusardi, 2009. "Where does regulation hurt? Evidence from new businesses across countries," NBER Working Papers 14747, National Bureau of Economic Research, Inc.
  12. Marco Da Rin & Marina Di Giacomo & Alessandro Sembenelli, 2010. "Corporate Taxation and the Size of New Firms: Evidence from Europe," Journal of the European Economic Association, MIT Press, vol. 8(2-3), pages 606-616, 04-05.
  13. 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.
  14. repec:dgr:kubtil:2010026 is not listed on IDEAS
  15. 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.
  16. King, Robert G. & Levine, Ross, 1993. "Finance and growth : Schumpeter might be right," Policy Research Working Paper Series 1083, The World Bank.
  17. repec:fth:wobaco:1083 is not listed on IDEAS
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