Entry Regulation and Business Start-ups: Evidence from Mexico

David S. Kaplan, World Bank
Eduardo Piedra, UT-Austin
Enrique Seira, ITAM

Abstract

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 that this is a causal effect. Most of the effect is temporary, concentrated in the first 15 months after implementation. The effect is robust to several specifications of the benchmark control group, to the inclusion of different time trends, and to the use of different samples. The estimated effect is much smaller than World Bank estimates for other countries and the effect stated by Mexican authorities.