Political decentralization and policy experimentation

Hongbin Cai () and Daniel Treisman ()
Additional contact information
Daniel Treisman: Department of Political Science, University of California, Los Angeles

No WP13_2007_05, Working Papers from Laboratory for Macroeconomic Analysis

Abstract: What determines the enforcement of deregulation reform of business activities? What are the outcomes of deregulation? We adress these questions using an episode of a drastic reform in Russia between 2001 and 2004 which liberalized registration, licensing, and inspections. Based on the analysis of micro-level panel data on regulatory burden, we find that: 1) The reform reduced administrative costs of firm, on average; but, the progress of reform had substantial geographical variation. 2) The enforcement of deregulation reform was better in regions with a transparent government, low corruption, strong fiscal incentives (i.e., reliance of local budgets on local taxes rather than fiscal transfers) and a powerful industrial lobby. 3) Using the exogenous variation in regulation generated by the interaction of reform and its institutional determinants, we find a substantial pozitive effect of deregulation on entry and small business employment and no effect on pollution and morbidity. The results support the “tollbooth” theory of the nature of regulation and are inconsistent with either the public interest theory or the regulatory capture theory.

Keywords: decentralization; innovation; policy experiments; voting; information. (search for similar items in EconPapers)
JEL-codes: H11 H70 H77 H83 D72 D78 (search for similar items in EconPapers)
Date: 2007-01

Downloads: (external link)
http://www.cas.hse.ru/Repec/pdf/WP13_2007_05.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:cas:wpaper:wp13_2007_05

Access Statistics for this paper

More papers in Working Papers from Laboratory for Macroeconomic Analysis
Contact information at EDIRC.
Series data maintained by Vadim Khramov ().