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Title:Greasing the wheels of entrepreneurship?: the impact of regulations and corruption on firm entry PDF Logo
Authors:Dreher, Axel
Gassebner, Martin
Issue Date:2007
Series/Report no.:CESifo working paper 2013
Abstract:The paper investigates whether the impact of regulations on entrepreneurship depends on corruption. We first test whether regulations robustly deter firm entry into the markets. Our results show that some regulations are indeed important determinants of entrepreneurial activity. Specifically, more procedures required to start a business and larger minimum capital requirements are detrimental to entrepreneurship. Second, we test whether corruption reduces the negative impact of regulations on entrepreneurship in highly regulated economies. Our empirical analysis for a maximum of 43 countries over the period 2003-2005 shows that corruption is beneficial in highly regulated economies. At the maximum level of regulation among our sample of countries, corruption significantly increases entrepreneurial activity. Our results thus provide support for the ‘grease the wheels’ hypothesis.
JEL:D73
F59
M13
L26
Document Type:Working Paper
Appears in Collections:CESifo Working Papers, CESifo Group Munich

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