Working Paper: CEPR ID: DP3039
Authors: Marianne Bertrand; Francis Kramarz
Abstract: Does entry regulation hinder job creation? We investigate this question in the context of the French retail industry, a sector that has experienced especially low rates of job creation over the last 25 years. Since the early 70s, the French government has required regional zoning board approval for the creation or extension of any large retail store. Using a unique database that provides time and regional variation in boards' approval decisions, we show that this requirement created barriers to entry in the retail sector. We also show that these barriers to entry, either measured directly by approval rates or predicted by the political composition of the boards, weakened employment growth in the retail industry. Our findings indicate that retail employment could have been more than 10% higher today had entry regulation not been introduced. Promoting product market competition may thus be a key reform for countries with poor employment performance.
Keywords: employment; retail trade; zoning regulation
JEL Codes: J23; L43; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political Preferences (D72) | Approval Rates of Zoning Boards (R52) |
| Political Preferences (D72) | Employment Growth (O49) |
| Entry Regulation (Z38) | Employment Growth (O49) |
| Approval Rates of Zoning Boards (R52) | Employment Growth (O49) |