Entry Regulation and Intersectoral Reallocation
Antonio Ciccone
UPF-ICREA & CEPR
and
Elias Papaioannou
Dartmouth College, NBER & CEPR
Bank of Greece
March 2012
Introduction – Model – Estimation – Empirical Results – Conclusion
Motivation: Entry Restrictions and Productivity
How do entry restrictions (delays) affect inter-sectoral factor
reallocation when open economies are hit by global industry shocks?
— Multi-sector world equilibrium model where countries put upper bound on entry
of new product varieties.
— Theory implies that in response to global sectoral shocks there is less factor
reallocation in economies with tighter restrictions compared to the frictionless
benchmark.
— Test this prediction in the 1980s and 1990s using two different proxies for
frictionless benchmark reallocation and two different econometric techniques (that
account for some serious shortcomings of previous works).
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
2
Introduction – Model – Estimation – Empirical Results – Conclusion
Existing Theoretical Literature
Entry costs  economic efficiency
—
—
—
—
—
Technology adoption (e.g. Parente and Prescott, 1994)
Industry efficiency (e.g. Hopenhayn, 1992)
Product variety (e.g. Dixit and Stiglitz, 1978)
Market power (e.g. Stigler, 1971).
Entrepreneurship and employment (e.g. Pissarides et al., 2001)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
3
Introduction – Model – Estimation – Empirical Results – Conclusion
Existing Theoretical Literature
Entry costs  economic efficiency
—
—
—
—
—
Technology adoption (e.g. Parente and Prescott, 1994)
Industry efficiency (e.g. Hopenhayn, 1992)
Product variety (e.g. Dixit and Stiglitz, 1978)
Market power (e.g. Stigler, 1971).
Entrepreneurship and employment (e.g. Pissarides et al., 2001)
Focus here
— Interaction between entry restrictions/delays and economic shocks
— Examine link: entry restrictions/delays  intersectoral factor reallocation
— Through inter-sectoral factor (employment) reallocation, the level of entry
regulation affects the growth rate of productivity.
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
4
Introduction – Model – Estimation – Empirical Results – Conclusion
Empirical Literature on Entry (Product Market
Regulation) Regulation
Measurement of entry costs and delays
De Soto (1989); Djankov, La Porta, Lopez-de-Silanes, and Shleifer (2002);
World Bank (Doing Business Around the World); OECD (Regulation Database)
Entry regulation and entrepreneurship/growth
Fisman and Sarria-Allende (2004); Klapper, Laeven, and Rajan (2006); Nicoletti
and Scarpetta (2001, 2002, 2006); Alesina, et al. (2005); Bertrand and Kramarz
(2002); Bruhn (2007); Aghion, et al. (2008); Yakovlev and Zhuravskaya (2007);
Ardagna and Lusardi (2008, 2010).
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
5
Other Related Strands of the Literature
Financial Development and Entry
King and Levine (1991); Rajan and Zingales (1998); Beck et al. (2008); Desai et
al. (2005); Aghion et al. (2007); see Levine (2005) for a review
Interplay between (product and labor market) regulation with economic shocks
Krueger and Pischke (1998); Blanchard (2000); Blanchard and Wolfers (2000);
Caballero et al. (2005).
6
Introduction – Model – Estimation – Empirical Results – Conclusion
Presentation Overview
1. Theory
1.
2.
3.
Model set-up
Equilibrium analysis when adjustment is frictionless
Global industry shocks and country-industry level (or country-level) entry
restrictions
2. Estimation Issues and Data
3. Empirical Results
1. Preliminary Evidence
2. Formal Regression Analysis
4. Conclusion
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
7
Introduction – Model – Estimation – Empirical Results – Conclusion
Set-Up, Preferences, and Technology
— Continuum of countries and sectors (each mass=1).
— Each sector is made up of freely traded varieties, differentiated by country of
origin.
— Range of available varieties is endogenous.
— Symmetric Cobb-Douglas preferences across industries (equal expenditure shares
across industries).
— Symmetric Constant-Elasticity-of Substitution within industries (substitution
elasticity: e > 1).
— Labor only production factor
— To produce q of a variety, firms need z=q/A production workers and 1 overhead
worker.
— There is heterogeneity in productivity A across countries, sectors, and varieties.
(parameter γ; smaller values imply less heterogeneity)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
8
Introduction – Model – Estimation – Empirical Results – Conclusion
Technology Level and Varieties (marginal variety)
A(V,n,i)
AVni 

Ani Vni
0   (e  1)  1
Each country produces a bit in each industry.
0
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
V(n,i)
9
Introduction – Model – Estimation – Empirical Results – Conclusion
Technology Shock and Varieties (marginal variety)
A(V,n,i)
AVni 

Ani Vni
0   (e  1)  1
0
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
V(n,i)
10
Introduction – Model – Estimation – Empirical Results – Conclusion
Demand
CES functional form
Price of a particular variety
• Increases in world income
• Increases in with prices charges by firms in the same industry (both across the
world and within the same country)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
11
Introduction – Model – Estimation – Empirical Results – Conclusion
Market Structure and Equilibrium
— Each firm produces a distinct variety and sets price to maximize profits
— Firms are charging a constant mark-up over marginal cost.
— Varieties that are produced less efficiently are sold more expensively.
— Goods markets clear internationally.
— Wages adjust to clear national labor markets. (Labor supply is inelastic and
constant in time.)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
12
Introduction – Model – Estimation – Empirical Results – Conclusion
Profit Maximization Employment (production workers
(z)) of the Marginal Variety and Number of Varieties
z(v,n,i)
e
e 1  (e 1)
zVni  Ywn ( Ani Pi )
0
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
Vni
V
13
Introduction – Model – Estimation – Empirical Results – Conclusion
Zero-Profit Variety Range at each Country-Industry
z(v,n,i)
1
Vni  ( Ani Pi ) Y
1
(e 1)

e
wn (e 1)
z0ni
0
V(n,i)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
V
14
Introduction – Model – Estimation – Empirical Results – Conclusion
Adjustment to Global Sectoral Shocks
Shocks to technology (Ani)
3 components:
1. country level (ρn)
2. industry level (σi)
3. country industry level (uni) [E(uni)=0]
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
15
Introduction – Model – Estimation – Empirical Results – Conclusion
Adjustment to Global Sectoral Shocks
Shocks to technology (Ani)
3 components:
1. country level (ρn)
2. industry level (σi)
3. country industry level (uni) [E(uni)=0]
Key role for industry adjustment
 ln Ani   ln Pi   n  ( i  uni )  ni  n
shock
price
response
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
16
Introduction – Model – Estimation – Empirical Results – Conclusion
Frictionless Intersectoral Employment Adjustment
Industry frictionless employment growth (at the extensive margin):
 ln Lif
  i
(i ) 
  ln Y   ln wn

General Equilibrium Effect
Direct Effect
Labor Market Clearing:
i  
E ( ln Li |  i ) 

f
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
Average (across sectors) shock in a country
17
Introduction – Model – Estimation – Empirical Results – Conclusion
Adjustment of Varieties with Country-Industry Specific
Entry Restrictions (delta)
 ln Vni
  n
0
%

n
 n  ni  /    ln Y   ln wn
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
Cut-off shock
ni
18
Introduction – Model – Estimation – Empirical Results – Conclusion
Factor Adjustment: Industry Employment Growth
 ln Lni
ε
%

n
Extensive Margin Only
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
ni
Intensive & Extensive Margin
19
Introduction – Model – Estimation – Empirical Results – Conclusion
Employment
Growth
Industry Shocks and Employment Growth in
General Equilibrium
Economy with less restricted entry
Economy with more restricted entry
0
C zone
B zone
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
Industry Shock
A zone
20
Introduction – Model – Estimation – Empirical Results – Conclusion
Employment
Growth
Industry Shocks and Employment Growth in
General Equilibrium
Economy with less restricted entry
Economy with more restricted entry
0
C zone
B zone
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
Industry Shock
A zone
21
Introduction – Model – Estimation – Empirical Results – Conclusion
Adjustment with Country-Specific Entry Restrictions
 ln Vni
n
exit
n
inaction
(extensive & intensive)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
ni
entry
22
Introduction – Model – Estimation – Empirical Results – Conclusion
Industry Expected Employment Growth and Global
Industry Shocks
need to integrate the country-industry shock to focus on the global shock
E ( ln Lni |  i ,  n ) 

  ln L( i  uni |  n )dFu

Quadratic approximation in  and 

E (  ln Lni |  i ,  n )   n  i   i n

Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
23
Introduction – Model – Estimation – Empirical Results – Conclusion
Model Estimating Equation 1
 ln EMPni   n   i  i EDn  vni
i     ln Lif
Industry frictionless global
employment growth
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
24
Introduction – Model – Estimation – Empirical Results – Conclusion
Model Estimating Equation 1
 ln EMPni   n   i  i EDn  vni
i     ln Lif
Industry frictionless global
employment growth
Model Estimating Equation 2
 ln EMPni   n   i   ( EDn   ln Lif )+ni
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
25
Introduction – Model – Estimation – Empirical Results – Conclusion
Proxies for Frictionless Employment Reallocation in
Response to Global Shocks
1.
Benchmark-country approach: use data from a country with low levels of
entry regulation, where employment growth is unlikely to reflect frictions in
product (or labor or capital) markets (Rajan and Zingales, AER 1998).
 Idiosyncrasies of benchmark country introduces measurement error.
 Measurement error does not necessarily take the “classical form.”
2.
Global estimation approach: estimate global employment reallocation in a
frictionless economy using data on all countries and accounting for the fact that
in countries with high barriers to entry (or other frictions) employment
reallocation might not reflect industry shocks (Ciccone and Papaioannou, 2010).
 Does not reflect idiosyncrasies of any country.
 Must be treated as a generated regressor.
(Consistency of estimates under quite weak conditions. Valid standard errors somewhat more
complicated. See Wooldridge 2002.)
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
26
Introduction – Model – Estimation – Empirical Results – Conclusion
2 Proxy Measures of Frictionless Employment Growth
1. US Employment Growth (US-EMPGRi)
2. Global Frictionless Employment Growth (G-EMPGRi )
EMPGRni   n  i  i EDn   ni
G  EMPGRi  i
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
27
Introduction – Model – Estimation – Empirical Results – Conclusion
Data
1.
Country-Industry Level (from UNIDO)
– Log change in employment (in the eighties and in the nineties).
– 55-45 countries; 27-28 manufacturing industries (more than 1,000 obs.)
2.
Country-Level
– Entry restriction indicators from Djankov, La Porta, Lopez-de-Silanes and
Shleifer (QJE 2002); focus on time to start business (model emphasis on
delays)
– Other controls (labor market regulation, financial development, income)
3.
Industry-level
– US Employment growth (proxy 1)
– Global employment reallocation in a frictionless economy (proxy 2)
– Other industry measures (external finance dependence, skill intensity, etc).
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
28
Introduction – Model – Estimation – Empirical Results – Conclusion
Preliminary evidence:
Model prediction of negative relationship between frictionless
employment growth and the marginal industry effect of entry delays
i
EMPGRni   n  i  i EDn
Frictionless employment growth
0
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
US-EMPGRi or G-EMPGRi
29
Introduction – Model – Estimation – Empirical Results – Conclusion
.02
Marginal Effect of Entry Delays and Frictionless
Employment Growth in the 1980s
R-squared: 0.762
coeff. (s.e): -0.2065 (0.0234)
324
323
.01
361
322
355 313
372 371
321
0
314
384
385
351
341
353
354
362 331
369
352
383
311
356
-.01
390
-.06
-.04
-.02
0
.02
342
381 382
332
.04
Frictionless employment growth in the 1980s
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
30
Introduction – Model – Estimation – Empirical Results – Conclusion
.03
Marginal Effect of Entry Delays and Frictionless
Employment Growth in the 1990s
324
.02
322
.01
354
353
390
314
323
0
341
372
321
369
355
-.01
362371
311
332
356
352
383
381
313
384
382
331342
351
-.02
R-squared: 0.656
385
coeff. (s.e.): -0.1754 (0.404)
361
-.15
-.1
-.05
0
.05
Frictionless Employment Growth in 1990s
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
31
Introduction – Model – Estimation – Empirical Results – Conclusion
.03
Marginal Effect of Entry Delays and Frictionless
Employment Growth (differences between the 1990s & 1980s)
324
.02
322
.01
354
353
390
314
323
0
341
372
321
369
355
-.01
362371
311
332
356
352
383
381
313
384
382
331342
351
-.02
R-squared: 0.656
385
coeff. (s.e.): -0.1754 (0.404)
361
-.15
-.1
-.05
0
.05
Frictionless Employment Growth in 1990s
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
32
Introduction – Model – Estimation – Empirical Results – Conclusion
Estimation
1.
LS using US industry employment growth to proxy frictionless reallocation

EMPGRn,i  n  i   EMPGRi,US  EDn
2.

LS using estimated global (non-US) frictionless industry employment growth.
EMPGRn,i  n  i    G-EMPGRi  EDn 
3.
2SLS using estimated global (non-US) frictionless industry employment
growth as an “instrument” for actual US employment growth.

EMPGRn,i  n  i   EMPGRi ,US  EDn
EMPGRi ,US  a  bG-EMPGRi
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation

1st Stage Figures
33
Introduction – Theory – Estimation – Empirical Results – Conclusion
LS Estimates – Benchmark Measure I (US)
 ln Li,n  n  i  (EDn   ln LUS
)   i ,n
i
Employment Growth 1980s
(1)
(2)
(3)
Administrative Entry Delay X
-0.1623
Frictionless Employment Reallocation (0.0380)
[ED X US-EMPGR ]
0.00
-0.1781
(0.0434)
0.00
Labor Market Regulation X
Frictionless Employment Reallocation
[LMR X US-EMPGR ]
0.0040
(0.0027)
0.13
Financial Underdevelopment X
Frictionless Employment Reallocation
[FIN-UND X US-EMPGR ]
adjusted R-squared
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
-0.1660
(0.0346)
0.00
Employment Growth 1990s
(4)
(5)
(6)
-0.2206
(0.0442)
0.00
-0.2291
(0.0506)
0.00
0.0016
(0.0034)
0.64
-0.0036
(0.0015)
0.02
0.376
1428
55
Yes
Yes
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
0.384
1386
53
Yes
Yes
-0.1863
(0.0462)
0.00
0.395
1349
52
Yes
Yes
-0.0032
(0.0017)
0.05
0.388
1001
43
Yes
Yes
0.387
981
42
Yes
Yes
0.394
975
42
Yes
Yes
34
Introduction – Theory – Estimation – Empirical Results – Conclusion
LS Estimates – Benchmark Measure II (GLOBAL)
 ln Li,n  n  i  (EDn   ln LGi )   i,n
Employment Growth 1980s
(1)
(2)
(3)
Administrative Entry Delay X
-0.2066
Frictionless Employment Reallocation (0.0304)
[ED X G-EMPGR ]
0.00
-0.1983
(0.0390)
0.00
Labor Market Regulation X
Frictionless Employment Reallocation
[LMR X G-EMPGR ]
0.0006
(0.0023)
0.78
Financial Underdevelopment X
Frictionless Employment Reallocation
[FIN-UND X G-EMPGR ]
adjusted R-squared
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
-0.1004
(0.0162)
0.00
Employment Growth 1990s
(4)
(5)
(6)
-0.2033
(0.0502)
0.00
-0.2083
(0.0526)
0.00
0.0008
(0.0024)
0.75
-0.0046
(0.0008)
0.00
0.384
1428
55
Yes
Yes
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
0.388
1386
53
Yes
Yes
-0.1265
(0.0298)
0.00
0.417
1349
52
Yes
Yes
-0.0028
(0.0008)
0.00
0.398
1054
43
Yes
Yes
0.396
1034
42
Yes
Yes
0.412
1027
42
Yes
Yes
35
Introduction – Model – Estimation – Empirical Results – Conclusion
1st Stage Figures
IV Estimates – Combining the two proxy measures of
frictionless employment reallocation
Employment Growth 1980s
(1)
(2)
(3)
Administrative Entry Delay X
-0.3781
Frictionless Employment Reallocation (0.0623)
[ED X US-EMPGR ]
0.00
-0.3534
(0.0720)
0.00
Labor Market Regulation X
Frictionless Employment Reallocation
[LMR X US-EMPGR ]
0.0013
(0.0040)
0.76
Financial Underdevelopment X
Frictionless Employment Reallocation
[FIN-UND X US-EMPGR ]
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
-0.3536
(0.0661)
0.00
Employment Growth 1990s
(4)
(5)
(6)
-0.5901
(0.1019)
0.00
-0.5799
(0.1105)
0.00
-0.0003
(0.0054)
0.96
-0.0156
(0.0034)
0.00
1428
55
Yes
Yes
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
1386
53
Yes
Yes
-0.4989
(0.1204)
0.00
1349
52
Yes
Yes
-0.0149
(0.0042)
0.00
1001
43
Yes
Yes
981
42
Yes
Yes
975
42
Yes
Yes
36
Introduction – Model – Estimation – Empirical Results – Conclusion
Sensitivity Checks
1. Differential effect of financial development for external finance dependent
sectors (Rajan and Zingales, AER 1998) and sectors with good opportunities (Fisman and
Love, JEEA 2007). [Table]
2. Positive effect of schooling level and schooling accumulation in spurring growth
of skill-intensive sectors (Ciccone and Papaioannou, REcStat 2008). [Table]
3. Controlling for income. [Table]
4. Alternative country-level proxy measures of entry regulation
― Number of administrative procedures to start a firm (from Djankov et al. (2002))
― OECD product (and entry) market regulation indicators
― Frazer Institute’s index on regulatory burdens to firm entry
Ciccone & Papaioannou: Entry Regulation and Intersectoral Reallocation
37
Introduction – Model – Estimation – Empirical Results – Conclusion
Conclusion
Potential effect of entry restrictions on productivity through impeding
intersectoral factor reallocation?
— Slow down the entry of new varieties in response to shocks and
therefore block intersectoral factor reallocation towards globally
expanding industries.
Do entry restrictions matter for intersectoral reallocation empirically?
— Yes; countries where new businesses can be incorporated more
quickly have seen faster employment growth in globally expanding
industries both in the 1980s and the 1990s (though there were
different manufacturing sectors with good prospects in the two
decades).
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
38
Appendix Figures and Tables
1.
2.
3.
4.
5.
Figure: US employment growth against global frictionless employment
growth in the 1980s (first-stage fit)
Figure: US employment growth against global frictionless employment
growth in the 1990s (first-stage fit)
Controlling for financial underdevelopment
Controlling for human capital
Controlling for economic underdevelopment
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
39
Introduction – Theory – Estimation – Empirical Results – Conclusion
IV Results
Proxies of Frictionless Employment Growth in the 1980s
.05
385
356
R-squared: 0.45
coeff. (s.e.) = 0.5521 (0.1200)
342
384
331
0
361
314
369
341
355
372
321
354
362
351
352
332
390
381
311
382
383
313
353
323
322
-.05
371
324
-.06
-.04
-.02
0
.02
.04
Frictionless Employment Growth in the 1980s
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
40
Introduction – Theory – Estimation – Empirical Results – Conclusion
IV Results
Proxies of Frictionless Employment Growth in the 1990s
.04
332
R-squared: 0.405
coeff. (s.e.): 0.3865 (0.1136)
.02
381
356
352
353
390
372 355
369
0
383
313
341
362
-.02
323
311
361
331
384 351
385
382
321
371
-.04
314
-.06
322
324
-.1
-.05
0
.05
Frictionless Employment Growth in the 1990s
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
41
Introduction – Theory – Estimation – Empirical Results – Conclusion
Results Preview
Controlling for financial underdevelopment
1980s
1990s
(1)
(2)
(3)
(4)
Administrative Entry Delay X
Frictionless Employment Reallocation
[ED X US-EMPGR ]
-0.1679
(0.0346)
0.00
-0.1790
(0.0348)
0.00
-0.2046
(0.0450)
0.00
-0.2000
(0.0438)
0.00
Financial Underdevelopment X
External Finance Dependence
[FIN-UND X EXTFIN ]
-0.0004
(0.0001)
0.00
Financial Underdevelopment X
Sales Growth
[FIN-UND X SALESGR ]
adjusted R-squared
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
-0.0003
(0.0001)
0.00
-0.0009
(0.0014)
0.50
0.400
1349
52
Yes
Yes
0.400
1349
52
Yes
Yes
-0.0045
(0.0019)
0.02
0.398
975
42
Yes
Yes
0.394
975
42
Yes
Yes
42
Introduction – Theory – Estimation – Empirical Results – Conclusion
Results Preview
Controlling for human capital (level and accumulation)
1980s
1990s
(1)
(2)
(3)
(4)
Administrative Entry Delay X
Frictionless Employment Reallocation
[ED X US-EMPGR ]
-0.1433
(0.0359)
0.00
-0.1395
(0.0352)
0.00
-0.1996
(0.0441)
0.00
-0.1993
(0.0442)
0.00
Country-level Schooling Years X
Industry Schooling Intensity
[SCH X SCHINT ]
0.0016
(0.0005)
0.00
0.0022
(0.0006)
0.00
0.0022
(0.0008)
0.01
0.003
(0.0009)
0.00
Country-level Schooling Accumulation X
Industry Schooling Intensity
[ΔSCH X SCHINT ]
adjusted R-squared
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
0.0803
(0.0228)
0.00
0.383
1346
51
Yes
Yes
0.392
1346
51
Yes
Yes
0.0089
(0.0036)
0.01
0.415
937
40
Yes
Yes
0.420
937
40
Yes
Yes
43
Introduction – Theory – Estimation – Empirical Results – Conclusion
Results Preview
Controlling for economic underdevelopment
Employment Growth 1980s
Employment Growth 1990s
OLS
US
(1)
OLS
GLOBAL
(5)
IV
(6)
OLS
GLOBAL
(2)
IV
(3)
OLS
US
(4)
Administrative Entry Delay X
-0.1135
Frictionless Employment Reallocation (0.0471)
[ED X EMPGR ]
0.02
-0.1222
(0.0363)
0.00
-0.2376
(0.0747)
0.00
-0.1048
(0.0500)
0.04
-0.0919
(0.0498)
0.07
-0.2916
(0.0951)
0.00
Economic Underdevelopment X
-0.1081
Frictionless Employment Reallocation (0.0739)
[EC-UND X EMPGR ]
0.14
-0.1648
(0.0578)
0.00
-0.3129
(0.1127)
0.01
-0.2713
(0.0676)
0.00
-0.1987
(0.0413)
0.00
-0.5705
(0.1140)
0.00
0.389
1428
55
Yes
Yes
__
1428
55
Yes
Yes
0.410
954
41
Yes
Yes
0.421
1005
41
Yes
Yes
__
954
41
Yes
Yes
adjusted R-squared
Observations
Countries
Industry Fixed-Effects
Country Fixed-Effects
0.377
1428
55
Yes
Yes
Ciccone Papaioannou: Entry Regulation and Intersectoral Reallocation
44