Aghion, P. Bergeaud, A. and Reenen, J.V.  <br/><br/>
The impact of regulation on innovation 

 - The American Economic Review  
 - 113(11), Nov, 2023: p.2894-2936 
<br/><br/> We present a framework that can be used to assess the equilibrium impact of regulation on endogenous innovation with heterogeneous firms. We implement this model using French firm-level panel data, where there is a sharp increase in the burden of labor regulations on companies with 50 or more employees. Consistent with the model's qualitative predictions, we find a fall in the fraction of innovating firms just to the left of the regulatory threshold. Furthermore, we find a reduction in the innovation response of firms to demand shocks just below the threshold. Regulation reduces aggregate innovation by 5.7 percent.- Reproduced <br/><br/>https://www.aeaweb.org/articles?id=10.1257/aer.20210107<br/>