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- Title
The responsiveness of entrepreneurs to working time regulations.
- Authors
Stephen, Frank; Urbano, David; van Hemmen, Stefan
- Abstract
In this article, we analyse the impact of enforcement practices (proxied by judicial formalism) and the regulation of working time on entrepreneurial activity by opportunity. We find that higher enforcement formalism mitigates the negative impact exerted by rigid working time regulations on the number of entrepreneurs. While it is agreed that regulatory rigidities may increase labour transaction costs, we show that entrepreneurs are less sensitive to labour regulations the higher the level of enforcement formalism in which they operate. Higher formalism is associated with lower enforcing efficiency and lower probability of being punished for transgressing laws. A policy implication is that encouraging labour flexibility might not improve conditions for entrepreneurial activity in procedurally formalist countries. This is due to the fact that, in those countries, flexibility de facto characterises employment relations, no matter what the law says.
- Subjects
WORKING hours; ATTITUDES of businessmen; LEGAL compliance; LABOR contracts; LABOR policy; OPPORTUNITY; TRANSACTION costs; LABOR supply -- Social aspects; EXPERTISE -- Social aspects; ECONOMICS
- Publication
Small Business Economics, 2009, Vol 32, Issue 3, p259
- ISSN
0921-898X
- Publication type
Article
- DOI
10.1007/s11187-007-9096-4