TY - JOUR AU - Branstetter,Lee G. AU - Lima,Francisco AU - Taylor,Lowell J. AU - Venâncio,Ana TI - Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal JF - National Bureau of Economic Research Working Paper Series VL - No. 16473 PY - 2010 Y2 - October 2010 UR - http://www.nber.org/papers/w16473 L1 - http://www.nber.org/papers/w16473.pdf N1 - Author contact info: Lee G. Branstetter Heinz College School of Public Policy and Management Department of Social and Decision Sciences Carnegie Mellon University Pittsburgh, PA 15213 Tel: 412/268-4649 E-Mail: branstet@andrew.cmu.edu Francisco Lima Department of Engineering and Management Instituto Superior Tecnico and CEG-IST Technical University of Lisbon Av. Rovisco Pais 1049-001 Lisboa Portugal E-Mail: francisco.lima@ist.utl.pt Lowell Taylor Carnegie Mellon University H. John Heinz III College 5000 Forbes Avenue Pittsburgh, PA 15213 Tel: 412/268-3278 E-Mail: lt20@andrew.cmu.edu Ana Venancio Management Department ISEG - Economic and Business School Technical University of Lisbon R. Miguel Lupi, 20 1200-78 Lisboa Portugal E-Mail: avenancio@iseg.utl.pt AB - Recent research has suggested that the reduction of entry regulation can promote firm entry and job creation, but little is known about the quality of firms and jobs created through these reforms. To shed light on this question, we employ data from Portugal, a country which implemented one of the most dramatic and thorough policies of entry deregulation in the industrialized world. The impact of these major changes can be traced with a matched employer-employee database that provides unusually rich information on the quality of founders and employees associated with the new firms. Our assessment indicates that the short term consequences of the reform were just as one would predict with a standard economic model of entrepreneurship: The reform resulted in increased firm formation and employment, but mostly among "marginal firms" that would have been most readily deterred by existing heavy entry regulations. These marginal firms were typically small, owned by relatively poorly-educated entrepreneurs, operating in the low-tech sector (agriculture, construction, and retail trade). These firms were also less likely to survive their first two years than comparable firms that entered prior to the reform. The social impact of entry deregulation may be limited by the quality of the firms it creates. ER -