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. (2002) 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.

Business Regulations, Global Entrepreneurship Monitor, Nascent Entrepreneurship, World Bank Doing Business, Young Businesses
Business Fluctuations; Cycles (jel E32), Government Policy and Regulation (jel G18), Business Administration and Business Economics; Marketing; Accounting (jel M), New Firms; Startups (jel M13), Management of Technological Innovation and R&D (jel O32)
Erasmus Research Institute of Management
hdl.handle.net/1765/7996
ERIM Report Series Research in Management
ERIM report series research in management Erasmus Research Institute of Management
Erasmus Research Institute of Management

van Stel, A.J, Storey, D, & Thurik, A.R. (2006). The Effect of Business Regulations on Nascent and Young Business Entrepreneurship (No. ERS-2006-052-ORG). ERIM report series research in management Erasmus Research Institute of Management. Erasmus Research Institute of Management. Retrieved from http://hdl.handle.net/1765/7996