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Entry regulation and entrepreneurship: a natural experiment in German craftsmanship*

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Author

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  • Davud Rostam-Afschar
Abstract
This paper uses the 2004 amendment to the German Trade and Crafts Code as a natural experiment for assessing the causal effects of this reform on the probabilities of being self-employed and of transition into and out of self-employment. This is achieved by using repeated cross-sections (2002–2009) of German microcensus data. I apply the difference-in-differences technique for three groups of craftsmen which were subject to different intensities of treatment. The results show that the complete exemption from the educational entry requirement has fostered self-employment significantly by substantially increasing the entry probabilities, while exit rates have remained unaffected. I find similar, though weaker relative effects for the treatment groups that were subject to a reduction of entry costs or a partial exemption from the entry requirements. Moreover, I consider effect heterogeneity within each of the treatment groups with respect to gender and vocational training, and show that the deregulation of entry requirements has been most effective for untrained workers. Copyright Springer-Verlag Berlin Heidelberg 2014

Suggested Citation

  • Davud Rostam-Afschar, 2014. "Entry regulation and entrepreneurship: a natural experiment in German craftsmanship," Empirical Economics, Springer, vol. 47(3), pages 1067-1101, November.
    • Handle: RePEc:spr:empeco:v:47:y:2014:i:3:p:1067-1101
    DOI: 10.1007/s00181-013-0773-7
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    Replication

    This item has been replicated by:
  • Petrik Runst & Jörg Thomä & Katarzyna Haverkamp & Klaus Müller, 2019. "A replication of ‘Entry regulation and entrepreneurship: a natural experiment in German craftsmanship’," Empirical Economics, Springer, vol. 56(6), pages 2225-2252, June.

    • More about this item

    Keywords

    Entrepreneurship; Regulation; Firm entry; Natural experiment; Craftsmanship; L51; J24; I28; M13;
    All these keywords.

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • I28 - Health, Education, and Welfare - - Education - - - Government Policy
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

    Lists

    This item is featured on the following reading lists, Wikipedia, or ReplicationWiki pages:
    1. Entry regulation and entrepreneurship: a natural experiment in German craftsmanship (Emp Econ 2014) in ReplicationWiki

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