Davud Rostam- Afschar, University of Mannheim

Title: Entry Regulation and Employment: Evidence from Retail and Labor Markets of Pharmacists

Abstract: We study short and long-term effects of chain entry on employment, leveraging an unexpected change in the maximum number of stores permitted for pharmacies. We show that the relationship between firm size and employment is ambiguous. Labor demand per firm increases with more stores per chain. Labor demand on store-level decreases due to more efficient chains. The reform increased overall employment by 2.5-4.5% and reduced costs up to 1.4 billion Euro per year. The policy affected the bottom of the employment distribution, reinforcing competition effects and persistent employment growth. The transition to the new equilibrium is completed after 50 years.

Presenter: Davud Rostam- Afschar, University of Mannheim

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