Entry regulation and business start-ups: Evidence from Mexico

We estimate the effect on business start-ups of a program that significantly speeds up firm registration procedures. The program was implemented in Mexico in different municipalities at different dates. Our estimates suggest that new start-ups increased by about 5% per month in eligible industries, and we present evidence supporting robustness and a causal effect interpretation. Most of the effect is temporary, concentrated in the first 15 months after implementation. The estimated effect is much smaller than World Bank and Mexican authorities claim it is, which suggests attention in business deregulation may be over emphasized.

Research highlights
► We estimate the effect on business start-ups of a program that significantly speeds up firm registration procedures.
► Our estimates suggest that new start-ups increased by about 5% per month in eligible industries, and we present evidence supporting robustness and a causal effect interpretation.
► Most of the effect is temporary, concentrated in the first 15 months after implementation.
► The estimated effect is much smaller than World Bank and Mexican authorities claim it is, which suggests attention in business deregulation may be over emphasized.