Red Tape Reduction and Firm Entry : Evidence from an Italian Reform

We estimate the effects of a simplification in the bureaucratic regulation for doing business on firm demographics in Italy, where a 2011 legislation reform required all municipalities to institute a one-stop shop for doing business. We use data for all Italian firms active in private non-financial industries and exploit the staggered implementation of the policy by municipalities in order to identify its causal effect. The results indicate that the one-stop shop increased entry rates and survival probability at one year. This effect is due essentially to sole proprietorships, which are plausibly those that benefit the most from reductions in red tape