Where does regulation hurt? Evidence from new businesses across countries / Silvia Ardagna, Annamaria Lusardi.

Format:

Book

Author/Creator:

Ardagna, Silvia.

Contributor:

National Bureau of Economic Research.

Lusardi, Annamaria.

Series:

Working Paper Series (National Bureau of Economic Research) no. w14747.

NBER working paper series no. w14747

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2009.

Summary:

We use two micro data sets that collect harmonized data across countries to investigate the effects of regulation on new businesses. We are able to distinguish between two types of entrepreneurs: those who start a business to pursue a business opportunity and those who start a business because they could not find better work. Irrespective of the measure of regulation we use, we always find a detrimental effect of regulation on entrepreneurship. While women are overall less likely to start new businesses, in more regulated countries women are pulled into entrepreneurship not to pursue a business opportunity but because they could not find better work. Moreover, regulation dampens the effects of self-assessed business skills and social networks. In more regulated economies, those with better business skills and those who know other entrepreneurs are less likely to become entrepreneurs to pursue a business opportunity. Tighter regulation also exacerbates fear of failure, further discouraging business start-up. All our estimates point to a negative effect of regulation.

Notes:

Print version record

February 2009.