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Employment Protection Laws, Barriers to Entrepreneurship, Financial Markets and Firm Size

Author

Listed:
  • Raquel Fonseca Benito
  • Natalia Utrero

Abstract

This paper provides new evidence on the institutional determinants of firm size. Using a comprehensive longitudinal database of firm characteristics across 29 industrial sectors in 15 OECD countries, the authors study how labor regulations and barriers to entrepreneurship affect industrial organization in the presence of credit market frictions. They show that strict employment protection laws and more barriers to entrepreneurship affect negatively firms in sectors that are dependent on external funds. Their findings show that the interaction between market regulations and financial imperfections help to explain some of the differences in firm structure across countries.

Suggested Citation

  • Raquel Fonseca Benito & Natalia Utrero, 2007. "Employment Protection Laws, Barriers to Entrepreneurship, Financial Markets and Firm Size," Working Papers WR-454, RAND Corporation.
    • Handle: RePEc:ran:wpaper:wr-454
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    File URL: https://www.rand.org/content/dam/rand/pubs/working_papers/2007/RAND_WR454.pdf
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    References listed on IDEAS

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    Cited by:

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    2. UEDA Kenichi & Stijn CLAESSENS, 2016. "Monopoly Rights and Economic Growth: An inverted U-shaped relation," Discussion papers 16093, Research Institute of Economy, Trade and Industry (RIETI).
    3. Mr. Kenichi Ueda & Mr. Stijn Claessens, 2008. "Banks and Labor as Stakeholders: Impact on Economic Performance," IMF Working Papers 2008/229, International Monetary Fund.

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    More about this item

    Keywords

    institutions; firm size; financial imperfections; labor costs; entrepreneurship costs;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • G2 - Financial Economics - - Financial Institutions and Services
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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