Essays on Entrepreneurship and Public Policy

This dissertation consists of three chapters empirically analyzing how public policy affects firm behavior, with a particular emphasis on small, entrepreneurial firms. The first chapter analyzes how occupational licensing affects firm entry and employment decisions. Occupational licensing is a government permission to work within a specific job classification. The costs to firms of paying to license employees can be a substantial consideration when firms are making location and hiring decisions. Using individual firm-level data I analyze how these costs affect firms by determining how differences in costs across state borders affect the likelihood of firms entering on a particular side of a state-pair. I find firms are less likely to enter in an expensive state if a substantially cheaper state is within a short distance. I also utilize a geographic regression discontinuity design and determine that firms on the more expensive side of a state border pair have approximately 2.3 employees fewer on average. Comparing similar licensed and unlicensed industries I find evidence of a persistent decrease in average employment for licensed firms in high cost states relative to unlicensed firms. The second chapter investigates potential gender related bias in equity, debt, and philanthropic contribution financing decisions for early-stage African entrepreneurial ventures. Utilizing a series of individual estimations and a two-stage Heckman Selection Model on questionnaire results from 2,812 early-stage entrepreneurs in Ghana, Kenya, Nigeria, Tanzania, Uganda, and South Africa, I find substantial evidence of a negative effect of having a female primary founder on the probability of being selected for equity funding but that this bias does not persist in the amount of equity funding the venture attracts. I find that in the case of debt and lending finance, female entrepreneurs are subject to a lower probability of being selected for funding and smaller total amounts of debt financing. Philanthropic contributions present an interesting alternative, and do not have any related gender bias in the initial selection or funding amount. This paper provides policy recommendations for encouraging female entrepreneurship, which has been shown to contribute to long-term sustainable economic growth. The third chapter explores the unintended consequences of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) on the entry and exit behaviors of small businesses. BAPCPA implemented significant changes to consumer bankruptcy law which had many unintended consequences for debtors, creditors, and consumers. Since small businesses are often unincorporated and therefore the financial assets and debts of the company cannot be separated from the owner, bankruptcy serves as a crucial form of partial wealth protection for self-employed and small business owners. This study focuses on how the implementation of BAPCPA affected small businesses entry and exit rates by utilizing a Difference-in-Difference methodology. A Triple-Differencing method is also incorporated to account for potential differences in small business entry and exit behaviors in low and high personal homestead exemption states. I find that BAPCPA decreased the entry rate of small businesses by approximately 4.91% and increased exit rates by 2.74%. These effects vary substantially across industries

The Impact of Economic Freedom on Startups

The decision to start an entrepreneurial activity largely depends upon an entrepreneur's institutional setting. Economic freedom is a widely used measure of institutional quality. Ample studies and a positive association between economic freedom and entrepreneurship; however, these studies have been limited to finding correlative relationships and have not determined a consistent set of relevant covariates. In this paper, startup density, provided by the Kauman Startup Activities Index, proxies startup entrepreneurship while the Economic Freedom of North America index proxies economic freedom. This paper provides causal insights into economic freedom and entrepreneurship in the United States from 2005 to 2015 using a post-double-selection LASSO method. We and that increases in regulatory freedom are likely to cause significant increases in startup density of entrepreneurial activities. In contrast, increases in freedoms of government spending and taxes cause decreases in startup density

The Impact of Economic Freedom on Startups

The decision to start an entrepreneurial activity largely depends upon an entrepreneur's institutional setting. Economic freedom is a widely used measure of institutional quality. Ample studies and a positive association between economic freedom and entrepreneurship; however, these studies have been limited to finding correlative relationships and have not determined a consistent set of relevant covariates. In this paper, startup density, provided by the Kauman Startup Activities Index, proxies startup entrepreneurship while the Economic Freedom of North America index proxies economic freedom. This paper provides causal insights into economic freedom and entrepreneurship in the United States from 2005 to 2015 using a post-double-selection LASSO method. We and that increases in regulatory freedom are likely to cause significant increases in startup density of entrepreneurial activities. In contrast, increases in freedoms of government spending and taxes cause decreases in startup density

Certificate of Need Laws and Health Care Use during the COVID-19 Pandemic

This paper investigates the impact of state-level Certificate-of-Need (CON) laws on COVID and non-COVID deaths in the United States during the SARS-CoV-2 pandemic. CON laws limit the expansion and acquisition of new medical services, such as new hospital beds. The coronavirus pandemic created a surge in demand for medical services, which might be exacerbated in some states that have CON laws. Our investigation focuses on mortality due to COVID and non-COVID reasons and understanding how these laws affect access to healthcare for illnesses that might require similar medical equipment to COVID patients. We find that states with high healthcare use due to COVID that reformed their CON laws during the pandemic had a reduction in mortality resulting from COVID-19, septicemia, diabetes, chronic lower respiratory disease, influenza or pneumonia, and Alzheimer’s Disease, relative to non-reforming CON states