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The Impact of Firm Entry Regulation on Long-living Entrants

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Prantl,  Susanne
Max Planck Institute for Research on Collective Goods, Max Planck Society;

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Citation

Prantl, S. (2010). The Impact of Firm Entry Regulation on Long-living Entrants.


Cite as: http://hdl.handle.net/11858/00-001M-0000-0028-6F80-7
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.