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Project

Entry Barriers and the Labor Market Outcomes of Incumbent Workers: Evidence from a Deregulation Reform in the German Crafts Sector

Project duration: 05.12.2022 to 05.12.2025

Abstract

We study the labor market outcomes of a deregulation reform in Germany that removedlicensing requirements to become self-employed in some occupations. Using longitudinalsocial security data, we implement a matched difference-in-differences design withentropy balancing to account for observable characteristics and unobserved individualheterogeneity. The reform tripled the number of businesses within ten years and led toslower earnings growth and higher unemployment for incumbent workers in deregulatedoccupations. However, the reform effect seems rather small, which we attribute to therelatively low competitiveness of new businesses. Supporting this view, the reform did notlead to overall employment growth.

Management

05.12.2022 - 05.12.2025
Jens Ruhose
05.12.2022 - 05.12.2025