Existing studies on business regulation – its determinants and effects – are largely focused on aggregate level measures. These aggregate level measures attempt to summarize many different types of regulations into a single monolithic whole. The key question then is how similar the underlying sub-components are in terms of their effects on economic activity and their determinants.
A few studies that attempt to address this question suggest that the picture at the aggregate and micro level can be very different. For example, in a study on labor laws in India’s manufacturing sector, Ahsan and Pages (2009) find that employment protection legislation and dispute resolution legislation have very different effects. For instance, labor intensive industries are hardest hit by stringent employment protection legislation, while capital intensive industries are hardest hit by dispute resolution legislation.
In another study, Amin and Haidar (2008) look at the determinants of the cost of registering property in over 120 countries using data from the Doing Business project. Distinguishing between notary and non-notary costs of property registration, they find little overlap between their determinants. For example, a 1% increase in GDP per capita is associated with a 0.3% decrease in non-notary costs but a 0.13% increase in notary costs; Catholic and Protestant countries relative to others and Presidential as opposed to Parliamentary systems show significantly lower non-notary costs but none whatsoever for notary costs. These findings suggest that looking at micro-regulatory measures can significantly improve our understanding of the causes and effects of regulation.
Join the Conversation