License to Sell: The Effect of Business Registration Reform on Entrepreneurial Activity in Mexico

By Miriam Bruhn. Review of Economics and Statistics, 2008

375 citations recorded by the source corpus.

Abstract This paper estimates the economic effects of a recent reform that simplified business entry regulation in Mexico. The reform was introduced in different municipalities at different points in time. Using microlevel data, I find that the reform increased the number of registered businesses by 5%. This increase was due to former wage earners' opening businesses. Former unregistered business owners were not more likely to register their business after the reform. The reform also increased wage employment by 2.2%. Finally, the results imply that the competition from new entrants decreased the income of incumbent businesses by 3%.

Subfields: Economics and Econometrics, Marketing

View Paper: https://www.semanticscholar.org/paper/3bdd58bcfd1fd134ea5537d3530e95ea0d252301

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Citations in the corpus

Do Interventions Targeted at Micro-Entrepreneurs and Small and Medium-Sized Firms Create Jobs? A Systematic Review of the Evidence for Low and Middle Income Countries (2014, background): “According to Bruhn (2011) the SARE reform in Mexico increased the number of registered firms by five percent and wage employment by 2.2 percent. However, employment decreased in ineligible firms (high risk industries) and hence the net effect is less impressive. Kaplan et al. (2011) use a different ”
Entry Regulation and the Formalization of Microenterprises in Developing Countries (2013, methodology): “Bruhn (2011) uses data on individuals’ employment status from the Mexican Labor Market Survey (ENE) to show”
The Demand for, and Consequences of, Formalization Among Informal Firms in Sri Lanka (2012, neutral): “All opinions offered represent those of the authors alone, and do not necessarily reflect the views of the World Bank, its Executive Directors, or the countries they represent.”
Informality: Causes and Consequences for Development (2020, background): “…and reimbursing all registration costs (De Mel et al. 2013, de Andrade et al. 2014), or creating economy-wide programs to simplify and reduce the monetary costs of registering a firm (Bruhn 2011, Kaplan et al. 2011, Piza 2018, Rocha et al. 2018) have very limited effects on registration.”
Coming out of the shadows? Estimating the impact of bureaucracy simplification and tax cut on formality in Brazilian microenterprises (2012, background): “Bruhn (2011) finds that an improvement in business entry regulation stimulates formality.”
The Benefits of Formalization: Evidence from Vietnamese Manufacturing SMEs (2012, background): “In fact, taking into account the voluntary aspect of informality may help explain why reforms aimed at simplifying business procedures have in some cases had no impact on firm registration (Bruhn, 2006; Kaplan et al., 2006).”
Corruption in Developing Countries (2012, neutral): “Bruhn (2008) uses the sequential implementation of a reform that simplified business entry regulations across municipalities in Mexico to estimate the economic effects of such reforms more convincingly than in cross-country data.”
Foreign direct investment and the ease of doing business (2015, methodology): “Using an early version of the entry costs component of the Doing Business data that we use in this paper, Klapper et al. (2006) find that costly entry regulations reduce the number of new firms created.”
Does formality improve micro-firm performance? Evidence from the Brazilian SIMPLES program (2011, background): “Bruhn (2008), exploiting the same innovation but different data sources found a larger rise in formalization: an increase of about 5% in the stock of registered businesses in eligible industries.4 However, she shows that the effect of SARE comes exclusively from former salaried workers opening…”
Do Entry Regulations Deter Entrepreneurship and Job Creation? Evidence from Recent Reforms in Portugal (2014, background): “In an effort to take the concerns raised by public interest theory seriously, some work focuses on the impact of regulation on potential market failures such as sub-standard product quality, pollution or public health (Djankov et al., 2002; Bruhn, 2011; Yakovlev and Zhuravskaya, forthcoming).”
Does corruption ever help entrepreneurship? (2016, neutral): “The empirical evidence finds extensive support to the public choice theory and shows that such regulation entry cost can deter employment, hamper productivity and negatively impact growth (see Kaplan et al. 2009; Aghion et al. 2008; Bruhn 2008).”