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Article dans une revue American Economic Review Année : 2023

The Impact of Regulation on Innovation

Résumé

We present a framework that can be used to assess the equilibrium impact of regulation on endogenous innovation with heterogeneous firms. We implement this model using French firm-level panel data, where there is a sharp increase in the burden of labor regulations on companies with 50 or more employees. Consistent with the model’s qualitative predictions, we find a fall in the fraction of innovating firms just to the left of the regulatory threshold. Furthermore, we find a reduction in the innovation response of firms to demand shocks just below the threshold. Regulation reduces aggregate innovation by 5.7 percent.
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Dates et versions

halshs-04330712, version 1 (08-12-2023)

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Philippe Aghion, Antonin Bergeaud, John van Reenen. The Impact of Regulation on Innovation. American Economic Review, 2023, 113 (11), pp.2894-2936. ⟨10.1257/aer.20210107⟩. ⟨halshs-04330712⟩
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