Working Paper: CEPR ID: DP5996
Authors: Antonio Ciccone; Elias Papaioannou
Abstract: Does cutting red tape foster entrepreneurship in industries with the potential to expand? We address this question by combining the time needed to comply with government entry procedures in 45 countries with industry-level data on employment growth and growth in the number of establishments during the 1980s. Our main empirical finding is that countries where it takes less time to register new businesses have seen more entry in industries that experienced expansionary global demand and technology shifts. Our estimates take into account that proxying global industry shifts using data from only one country--or group of countries with similar entry regulations--will in general yield biased results.
Keywords: entry; entry regulation; globally expanding industries
JEL Codes: E6; F43; L16
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| longer administrative delays (time to register) (K16) | slower establishment growth (entry) (L26) |
| longer administrative delays (C41) | slower growth in product variety (L15) |
| slower growth in product variety (L15) | employment growth in expanding industries (O49) |
| administrative delays (K23) | entry rates (J68) |