most important type of product market reform measured by its contribution to aggregate employment. The average level of reforms reducing entry barriers between 1998–2013, as measured by the OECD PMR indicators, is associated with a statistically significant reduction in the unemployment rate by 1.4 percentage points. In contrast, reducing barriers to trade and investment and lessening state control play a much smaller role. Bassanini (2015) discusses the effect of lowering entry barriers on industry employment in the short term and focuses his analysis on three network industries in 23 OECD countries. He stresses that these sectors are characterized by large incumbent firms, which are more likely to immediately engage in reorganization and reduction of overstaffing after deregulation than other industries, which are dominated by small firms. This mechanism can be thought of as incumbents’ attempt to achieve entry-deterrence, making their production more cost-efficient before the entry of new competitors. By estimating local projection models, Bassanini (2015) indeed finds non-negligible negative short-term effects on employment. A decrease in the entry barriers proxy of 1 point, a relatively large change only observed in about 5 percent of the sample, leads to a decrease in industry employment of 0.6–2.5 percent. This effect vanishes only 4 years after the reform. The initial decrease in employment is accompanied by a rapid fall in prices by 0.6 percent and an increase in labor productivity by 1.7 percent.

In what follows, we outline the implications that some explicit policies hindering firm entry have on competition and labor market outcomes. Bertrand and Kramarz (2002) exploit a quasi-random variation in the entry regulation on the French retail market, finding evidence that stronger entry deterrence reduces employment growth. Exploiting variation in approval rates of new retail business registrations by regional zoning boards, they find evidence for increased concentration and prices charged by retailers in more regulated areas. In a counterfactual exercise, they show that moving a department from the first quartile of the approval rate distribution (about 30 percent) to the third quartile (about 50 percent) would imply at least a 7-percent increase in retail employment. Distinguishing between worker types, they document a slight negative effect of higher entry barriers on female employment shares.

Cooke et al. (2019) analyze an “On the Spot Firm” program introduced in Portugal in 2005, which reduced the time, cost, and bureaucracy of new business registrations. They find that the female employment share grows strongly after the reforms, particularly in managerial and high-skill positions, both within firms and across firms in an industry. They also obtain a positive and statistically significant differential effect of the reform on the pay of female workers, reducing the gender pay gap by 1.7 percentage points for middle managers and high-skilled workers and by 1 percentage point for medium-skilled workers. Finally, they also report that non-discriminatory employers, approximated by a larger female employment share, increased employment more after the reform than discriminatory employers. The latter also exhibits a higher probability of exiting the market following the reform, which is in line with the dynamic efficiency argument by the OECD (2018b). Branstetter et al. (2014) examine the same reform and estimate that the program increased the number of new firms per 10,000 county inhabitants by around 17 percent and created around 7 additional jobs per month. However, they show that the new firms are mostly marginal firms, which are mainly small, operate in low technology sectors, and are less likely to survive than non-marginal firms. They are also run by less-educated, more female, and older entrepreneurs. Some 19