The effect of business regulations on nascent to young business entrepreneurship
March 2007
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We examine the relationship, across 39 countries, between regulation and entrepreneurship using a new two-equation model. We find the minimum capital requirement required to start a business lowers entrepreneurship rates across countries, as do labour market regulations. However the administrative considerations of starting a business – such as the time, the cost, or the number of procedures required – are unrelated to the formation rate of either nascent or young businesses. Given the explicit link made by Djankov et al. [Djankov et al. 2002, ‹The Regulation of Entry’, Quarterly Journal of Economics 117(1), 1–37] between the speed and ease with which businesses may be established in a country and its economic performance – and the enthusiasm with which this link has been grasped by European Union policy makers – our findings imply this link needs reconsidering.
- regulation
- nascent entrepreneurship
- Global Entrepreneurship Monitor
- World Bank doing business
- young businesses
- L26 : Entrepreneurship
- O57 : Comparative Studies of Countries
- M13 : New Firms; Startups
- L51 : Economics of Regulation
- K20 : Regulation and Business Law: General
- business
- entrepreneurship
- country
- regulation
- entrepreneur
- table
- policy
- necessity
- variable
- opportunity
- effect
- number
- entrepreneurship rates
- business entrepreneurship rate
- business rate
- model
- equation
- level
- indicator
- impact
