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Impact of Deregulation on Entrepreneurship: Evidence from Portugal

This study evaluates the effects of recent deregulation in Portugal on firm entry, employment in new firms, and survival rates. Findings show increased entry by female, older, and less educated entrepreneurs. The introduction of one-stop shops led to significant increases in firm entry and employment in small firms. The study suggests further investigation into industry controls and factors affecting entrepreneurship.

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Impact of Deregulation on Entrepreneurship: Evidence from Portugal

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  1. Comments to “Do entry Regulations deter Entrepreneurship and Job Creation?: Evidence from Recent Reforms in Portugal” Carmen Pagés March 2011

  2. Whatdoes the paper do? • Evaluatesexperience of deregulation in Portugal using a D-D methodology. • It uses the factthat the programstarts at different times in differentmunicipalities. • It compares firmentry, employment in newlycreatedfirms and survival of new firms in ´treated´vs´untreated´ municipalities. • Italsoassesses the characteristics of firms and theirentrepreneurs for firmscreatedafterderegulation.

  3. What do theyfind? • The introduction of one stop shops isassociatedwith 17% increase in firmentry and a 22% increase in employment in new firms. • The increase comes fromfirms of 2 and 3-5 employees. No change for firms >5. • Firmswhichstartedafterprogramhadlowersurvivalrates(4 pp. less) • Increase in entry of female, older, and lesseducatedentrepreneurs.

  4. Are the resultsconvincing? • D-D methodologyusedalready in similar papers: Bruhn 2008; Kaplan et al, forthcoming. • Itdoesnotspecify# of “controls”. Howmanycountieswithoutchange? • It uses twotypes of specifications: • Zcmy = 1 fromopeningmonthafterwards, o otherwise. • Full set of dummies: Zlc=1 , l=-10….,0,1,…10, for example Z-1c =1 in the month prior to the opening of one stop shop

  5. Does is start before?

  6. Are the resultsconvincing? • Couldrunwith a trend, toassessimpact of otherfactorsthat lead towardshigherfirmentry in thisperiod. • Whathappenswhenperiod FE are introduced? • Probability of beinganentrepreneurlessthan 0.01. LPM badapproximation in the extremes. • Coud use a triple D-D-D modelusing as controls the industries in table A.1 (excluded).

  7. Couldalso examine: • Weretheseworkers/firmsalready active butunregistered/informal? • More likelygiven the types of firmsthatregistered • Were the entrepreneursemployeesbefore? • Whathappenedtooverallemployment? • Didemployment in continuingestablishments decline as a consequence of increasedcompetition? • Are the resultsbig/small? • Howmuchdoesimply in terms of % of total employment/economicactivity?

  8. In conclusion • A very nice paper with a very nice dataset… • Want to know more!

  9. THANKS!

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