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

Panle Jia Barwick¹; Luming Chen²; Shanjun Li³; Xiaobo Zhang⁴

¹ Department of Economics, University of Wisconsin-Madison, NBER, and CEPR [email protected] · ² Stanford University [email protected] · ³ Dyson School of Applied Economics and Management, Cornell University and NBER [email protected] · ⁴ Guanghua School of Management, Peking University and IFPRI [email protected]

Although entry regulations are 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.

DOI

10.1162/rest_a_01549

Pages

1-46

Language

en

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