NEW STUDY: Costly Regulations Hurt Entrepreneurship, Reform Needed to ‘Break Down Barriers’ for Jobs, Innovation


Costly regulations serve as a barrier to entrepreneurship, small business growth, innovation, and job opportunities to lift people into the middle class, concludes the first paper in a new series from the California-based, free-market think tank, the Pacific Research Institute.

Click here to download the first paper in the Breaking Down Barriers to Opportunity series

“Small businesses create new jobs and innovation that fuel economic growth and give the poor opportunities to grow into the middle class,” said Dr. Wayne Winegarden, PRI Senior Fellow in Business and Economics and author of Breaking Down Barriers to Opportunity. “Increased regulations – often made in the name of workers – impose excessive costs and time burdens that become barriers to entrepreneurship. Our series shows that reform is needed to break down these barriers and give people more opportunity to better their lives and communities.”

The first paper in the Breaking Down Barriers to Opportunity series uses 3 different measurements of the state and federal regulatory burden (total pages in the Federal Register by year, share of employment in regulatory-compliance jobs, and how states rank on state labor regulatory burdens in PRI’s Small Business Regulation Index) to determine whether increased regulations are associated with a worse climate for entrepreneurship and small business creation and growth.

Winegarden concludes that – based on every measure – regulations are thwarting individuals from starting and growing a small business or getting a good-paying job at an innovative new company. He argues that state and federal policymakers must do more than just stop the push for increased regulations. Lawmakers, he says, must reform occupational licensing laws that deny job opportunities for many and fix broken state workers compensation laws that drive up costs and reduce entrepreneurship.

Future papers will explore the negative impact of fewer entrepreneurial opportunities on working class communities; how regulations disproportionately harm certain industries; and how regulations affect small business opportunities in health care and technology.

Dr. Wayne Winegarden is a Senior Fellow in Business and Economics, and Director of the Center for Medical Economics and Innovation at Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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