DP9550 Firm Entry Deregulation, Competition and Returns to Education and Skill

Author(s): Ana Fernandes, Priscila Ferreira, L. Alan Winters
Publication Date: July 2013
Keyword(s): Entry Deregulation, Product Market Competition, Returns to Education, Wage Structure
JEL(s): J3
Programme Areas: International Trade and Regional Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=9550

This paper investigates the effects of firm entry deregulation. We exploit a recent reform that simplified business entry in Portugal as a quasi-natural experiment. We use cross-municipality-year variation in the implementation of the reform for identification. Using matched employer-employee data for the universe of workers and firms, we find that the reform is associated with increased firm entry and competition within industries and regions. The returns to a university degree increased by 5% while the returns to skills increased by 3%.