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The Impact of Firm Entry Regulation on Long-living Entrants

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  • Susanne Prantl

    (Max Planck Institute for Research on Collective Goods, Bonn)

Abstract

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 by 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.

Suggested Citation

  • Susanne Prantl, 2010. "The Impact of Firm Entry Regulation on Long-living Entrants," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2010_30, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2010_30
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    More about this item

    Keywords

    Firm entry regulation; sustained entry; self-employment; firm size;
    All these keywords.

    JEL classification:

    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • P52 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Studies of Particular Economies

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