The impact of firm entry regulation on long-living entrants |
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Authors: | Susanne Prantl |
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Institution: | (1) Max Planck Institute for Research on Collective Goods, Kurt-Schumacher-Str. 10, 53113 Bonn, Germany |
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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, 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. |
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