Runst, Petrik Thomä, Jörg Haverkamp, Katarzyna Müller, Klaus
Year of Publication:
ifh Working Paper 2 (2017)
Rostam-Afschar (2014) analyzes the impact of the deregulation of the German Trade and Crafts Code of 2004 on entrepreneurial activity, using German microcensus (MC) data. He finds a positive effect on market entry and self-employment and no change in exit probabilities. As these results partially conflict with company registry data, we re-examine the causal effects. Most importantly, we generate a novel classification scheme that aims to achieve an improved identification of crafts trades. Non-craftsmen need to be removed from the analysis as the policy change exclusively pertains to the crafts sector. In contrast to Rostam-Afschar’s findings, the increase in self-employment and entry is more pronounced in the completely deregulated B-trades rather than the partially deregulated A-trades. In addition, exit probabilities do not remain constant but rather increase. Our results are in line with company registry data.