Entry Deregulation, Market Turnover, and Efficiency: China’s Business Registration Reform

Panle Barwick (), Luming Chen, Shanjun Li and Xiaobo Zhang

No 19439, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Although entry regulation is ubiquitous across countries, comprehensive evaluations on how such regulations affect firm dynamics and productivity are lacking. We examine a 2012-2014 pilot program in Guangdong (which later became a national policy) that was designed to reduce firm registration costs and encourage entrepreneurial activities. Using administrative data on firms’ business registrations and annual reports, our analysis shows that the reform increased firm entry by 25% and firm exit by 8.7% in the manufacturing sector. The productivity of post-reform entrants was 1.1% higher than the productivity of pre-reform entrants, likely due to relaxed financial constraints and more intense competition.

Keywords: Entry; deregulation (search for similar items in EconPapers)
JEL-codes: L10 L50 L60 O40 (search for similar items in EconPapers)
Date: 2024-09
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