Entry Barriers, Idiosyncratic Distortions, and the Firm Size Distribution

Roberto N. Fattal-Jaef
Authors registered in the RePEc Author Service: Roberto N. Fattal Jaef

American Economic Journal: Macroeconomics, 2022, vol. 14, issue 2, 416-68

Abstract: This paper studies the interaction between barriers to firm entry and distortions to allocative efficiency in a standard model of firm dynamics. We derive a strategy to infer entry barriers based on cross-country differences in the firm size distribution and idiosyncratic distortions. The inferred barriers resemble regulation-based indicators in advanced economies but are substantially higher in middle- and low-income countries. Regulation-based indicators cannot account for cross-country differences in average firm size and underestimate the aggregate productivity gains associated with their removal by up to 8 percent on average.

JEL-codes: D21 D24 H25 L11 L60 (search for similar items in EconPapers)
Date: 2022
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Citations: View citations in EconPapers (7)

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DOI: 10.1257/mac.20200234

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