Entry regulations and labour market outcomes: Evidence from the Italian retail trade sector

The paper analyzes the relationship between entry regulations and employment in the Italian retail trade sector. In Italy the opening of large outlets is regulated at the regional level. First, by using differences-indifferences estimators the paper presents evidence that in regions with less stringent entry regulations, retail trade employment does not decrease. Second, the paper focuses on the effects of the rules implemented in Abruzzo and Marche, two otherwise close and similar Italian regions which adopted very different policies: the first set tight restrictions on the opening of large stores; the second did not impose substantial entry regulations. The results show that in Marche after the inception of the flexible regulations the share of total retail trade employment in total population increased by 0.8 percentage points more than in Abruzzo. Fiercer competition also led to a recomposition of employment in small retail shops. These findings are robust to a number of checks. (c) 2007 Elsevier B.V.. All rights reserved.