The impact of firm entry regulation on long-living entrants

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, exploiting a natural experiment in firm entry regulation. After German reunification, East...

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Bibliographic Details
Published in:Small business economics 2012-07, Vol.39 (1), p.61-76
Main Author: Prantl, Susanne
Format: Article
Language:English
Subjects:
Artisans
Business and Management
Deregulation
Economic conditions
Economic growth
Economic regulation
Empirical evidence
Empirical research
Employment
Enterprises
Entrepreneurs
Entrepreneurship
Experiments
Germany
Industrial Organization
Industrial regulation
Management
Market entry
Microeconomics
Regulation
Regulatory reform
Self employment
Self-employed workers
Size of enterprise
Startups
Studies
Trade regulations
Transition economies
Vocational education
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Summary: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, 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.
ISSN:0921-898X
1573-0913
DOI:10.1007/s11187-010-9293-4