Does Entry Regulation Hinder Job Creation? Evidence from the French Retail Industry

By Marianne Bertrand, Francis Kramarz. Social Science Research Network, 2002

559 citations recorded by the source corpus.

Does entry regulation hinder job creation? We investigate this question in the context of the French retail industry, a sector that has experienced especially low rates of job creation over the last 25 years. Since the early 70s, the French government has required regional zoning board approval for the creation or extension of any large retail store. Using a unique database that provides time and regional variation in boards' approval decisions, we show that this requirement created barriers to entry in the retail sector. We also show that these barriers to entry, either measured directly by approval rates or predicted by the political composition of the boards, weakened employment growth in the retail industry. Our findings indicate that retail employment could have been more than 10% higher today had entry regulation not been introduced. Promoting product market competition may thus be a key reform for countries with poor employment performance.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/a46b949a97c611c2981523bba484160b60f5940f

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Citations in the corpus

Product Market Competition, Returns to Skill and Wage Inequality (2005, unknown): “…account existing explanations that have 3 Other consequences of competition that are beyond the domain of this paper are its impact on employment (Bertrand and Kramarz, 2001), on market value and innovation (Blundell et al., 1999; Aghion et al., 2002; Nickell 1996 and Griffith, 2001) find…”
Service regulation and growth: evidence from OECD countries (2011, background): “Sector-specific restrictions, such as those prevailing in utilities and services, have been shown to decrease investment (Alesina et al., 2005) and employment (Bertrand and Kramartz, 2002), and to increase prices (Martin et al., 2005) in the regulated sectors.”
High Unemployment Yet Few Small Firms: The Role of Centralized Bargaining in South Africa (2012, background): “By means of comparison, Bertrand and Kramarz (2002) estimate that French restrictions on new retail rms led to a 3% decrease in retail employment, Besley and Burgess (2004) estimate that labor regulation reduced manufacturing employment in India by 7%, and Harrison and Scorce (2008) nd that a 50% ”
Team Incentives and Performance: Evidence from a Retail Chain (2015, unknown): “In addition to clustering errors at the shop level, which may still underestimate coefficient standard errors in small samples (Cameron and Miller, 2015), we implement another solution, originally proposed in Bertrand et al. (2004) – to estimate our baseline”
The Demand for, and Consequences of, Formalization Among Informal Firms in Sri Lanka (2012, unknown): “1”
Structural Transformation and the Deterioration of European Labor Market Outcomes (2008, background): “See also Fonseca, Lopez-Garcia and Pissarides (2001) for empirical evidence in support of this effect in a cross-section of countries and Bertrand and Kramarz (2002) for the analysis of a specific entry barrier in France.”
Entry regulation and business start-ups : evidence from Mexico (2007, unknown): “Bertrand and Kramarz (2002) study the effect of increasing regulatory entry barriers. By using variation across time in the toughness (rejection rates) of the application of zoning restrictions in France, they show that these restrictions have a negative impact on employment growth. Klapper et al. (”
Marketization of Household Production and the EU-US Gap in Work (2005, unknown): “example, Bertrand and Kramarz (2002) study the impact of authorization to set up supermarkets on labour markets.”
Product Market Reforms, Labour Market Institutions and Unemployment (2006, unknown): “1 See, amongst others, Elmeskov, Martin and Scarpetta (1998), Nickell and Layard (1999), Blanchard and Wolfers (2000), Belot and van Ours (2001).”
Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain (2008, background): “Similarly, in the case of a single country, Bertrand and Kramarz (2002) find the entry restrictions imposed by regional zoning boards in France lead to slower retail employment growth.”