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The effect of business regulations on nascent and actual entrepreneurship

André van Stel (), David Storey and Roy Thurik ()

Papers on Entrepreneurship, Growth and Public Policy from Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group

Abstract: This paper investigates the effect of business regulations on various measures of entrepreneurship. Using data for a sample of countries participating in the Global Entrepreneurship Monitor between 2002 and 2005, we estimate a two-equation model explaining the nascent and the actual entrepreneurship rate, while taking into account the interrelationship between the two variables. Various determinants of entrepreneurship reflecting the demand and supply side of entrepreneurship as well as business regulation measures are incorporated in the model. Data on various categories of business regulations are taken from the World Bank Doing Business data base. Our estimation results suggest that, while entry regulations only have a small and indirect impact on the actual entrepreneurship rate, the impact of labour market regulations is more important. We also find that the determinants of opportunity and necessity entrepreneur-ship are fundamentally different.

Keywords: nascent entrepreneurship; young businesses; business regulations; Global Entrepreneurship Monitor; World Bank Doing Business (search for similar items in EconPapers)
JEL-codes: K20 L51 M13 O57 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-ent, nep-law, nep-reg and nep-tid
Date: 2006-02
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Persistent link: http://EconPapers.repec.org/RePEc:esi:egpdis:2006-04

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