Tuesday, September 22, 2015

How regulation kills jobs

By making it more difficult for new entrants / startups / entrepreneurs (USNews):

While we find that regulation reduces the number of new business start-ups, it does not appear to harm existing businesses. In fact, we find that the largest firms in an industry – those with more than 500 employees – actually benefit when regulation increases. Why? They are less likely to go out of business, presumably because they are better able to hire accountants and lawyers to deal with the red tape. In addition, they can afford to hire lobbyists that ensure regulation is tailored to their advantage. Potential entrepreneurs, on the other hand, have neither the resources nor the political connections necessary to overcome the same red tape.

Federal regulation increased 28 percent from 1997 to 2012. The economy of the late '90s is not usually remembered as a time when unregulated firms were wreaking havoc on the economy. Our study results suggest that even just returning to the modestly lower level of regulation of the late '90s would lead to over 6,000 additional new businesses being started and 100,000 new jobs being created every year.

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