License to Sell : The Effect of Business Registration Reform on Entrepreneurial Activity in Mexico
This paper studies the effect of business registration regulation on economic activity using micro-level data. The identification strategy exploits the fact that a recent business registration reform in Mexico was introduced in different municipali...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2008/02/9043810/license-sell-effect-business-registration-reform-entrepreneurial-activity-mexico http://hdl.handle.net/10986/6596 |
| Summary: | This paper studies the effect of
business registration regulation on economic activity using
micro-level data. The identification strategy exploits the
fact that a recent business registration reform in Mexico
was introduced in different municipalities at different
points in time. Using panel data from the Mexican employment
survey, I find that the reform increased the number of
registered businesses by 5 percent in eligible industries.
This increase was due to former wage earners opening
businesses. Former unregistered business owners were not
more likely to register their business after the reform.
Moreover, employment in eligible industries went up by 2.8
percent, and people who were previously unemployed or out of
the labor force were more likely to work as wage earners
after the reform. Finally, the results imply that the
competition from new entrants lowered prices by 0.6 percent
and decreased the income of incumbent businesses by 3.2 percent. |
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