Abstract
Burdensome entry regulations can impede productivity growth, particularly in the service sector, characterized by limited competition. We examine this issue using a novel indicator of entry regulation at the 5-digit sector level, relying on a unique dataset that covers the universe of firms and exploiting various reforms that changed the extent of regulation across sectors and over time. These new data reveal that, akin to productivity, entry regulation varies significantly across narrowly defined sectors. The empirical analysis shows that, in sectors experiencing reforms, average productivity and entry rates increase and prices decrease relative to the control sectors. Both incumbents and new entrants contribute to the positive productivity performance. Although both professional requirements and bureaucratic procedures negatively affect productivity, the latter prove more relevant. Finally, the impact of entry regulation varies across firms and industries, being stronger in sectors with higher ≪natural≫ entry rate and in those with larger markup.
Local Organizer: Carmine Guerriero e Guglielmo Barone