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Entry costs and cross-country differences in productivity and output

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Abstract

This paper contributes to the literature on cross-country income differences by studying the effect of entry barriers on productivity and output. Using instrumental variable regressions I show that higher entry costs significantly reduce output per worker and that they do so by lowering total factor productivity. In particular, an increase in entry costs by 80% of income per capita, which is one half of their standard deviation in my sample, is estimated to decrease total factor productivity and output per worker by 22% and 29%, respectively.

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  1. Cornell University, Ithaca, USA

    Levon Barseghyan

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  1. Levon Barseghyan
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Correspondence to Levon Barseghyan.

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Barseghyan, L. Entry costs and cross-country differences in productivity and output. J Econ Growth 13, 145–167 (2008). https://doi.org/10.1007/s10887-008-9026-6

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  • DOI: https://doi.org/10.1007/s10887-008-9026-6

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