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NOTE: Since 2009 the title of the International Journal of Entrepreneurship Education (IJEE) has been changed to the title above.  ISSN numbers: IJEE 1649-2269 and IRE 2009-2822

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ISSN Number: 2009-2822. Frequency: 4 Issues + 1 Hard Copy per year 

Article #1633 - The Relationship Between Entry Regulation and Nascent Entrepreneurship Revisited

IRE Vol 18: Issue 3, 2020 (publishing soon)

Author(s): Arnoud de Jong and Cornelius A. Rietveld (Erasmus School of Economics, Erasmus University Rotterdam, the Netherlands) and André van Stel (Trinity College Dublin, Ireland and Kozminski University, Warsaw, Poland)

Following the seminal study by Djankov et al. (2002), several studies have confirmed their main finding by showing positive relationships between the ease of starting up a formal business and various measures of formal entrepreneurship. However, studies linking up the ease of starting up a formal business with measures of total (formal + informal) entrepreneurship have been much rarer. An exception has been the study by Van Stel et al. (2007) who did not find evidence of such a link. The present paper replicates this study using more recent data and more sophisticated (multilevel) estimation models. In particular, we investigate the relationship between country-level entry regulation and an individual-level measure of (nascent) entrepreneurship that does not distinguish between formal and informal entrepreneurship. Our results suggest that also today, reforms in entry regulation may not influence total entrepreneurship in a country but rather the distribution between formal and informal entrepreneurship types. A second contribution of this paper is the investigation of a possibly mediating effect of the perceived ease of starting a business on the relationship between entry regulation and the propensity of individuals to be a nascent entrepreneur. Our empirical analysis did not find evidence for such a mediating relationship.