The Cost of Regulatory Compliance in the United States (with Francesco Trebbi)
Abstract
We quantify firms' regulatory compliance costs from 2002 to 2014 in terms of their labor spending to adhere to government rules. Detailed establishment-level occupation data, in combination with occupation-specific task information, allow us to recover the share of an establishment's wage bill owing to employees engaged in regulatory compliance. Regulatory costs account on average for 1.34 to 3.33 percent of the total wage bill of a firm, totaling between $79 and $239 billion in 2014. We investigate the returns to scale in regulatory compliance and find an inverted-U shape, with the percentage regulatory spending peaking for a firm size of around 500 employees. Finally, we develop an instrumental variable methodology for decoupling the role of regulatory requirements from that of enforcement in driving firms' compliance costs.
About this workshop
The Public Governance workshop is an online seminar series focused on state of art research in political economy that uses non-traditional data and data-intensive methods.
The workshop gives a platform for the research on the role of governance in designing and developing better policies. Key features are the political environment, the role of the media, the engagement of stakeholders such as civil society and firms, the market structure and level of competition, and the independence of public regulators, among others. Particular emphasis is placed on research with NLP methods due to the proven usefulness of transforming text into data for further econometric analysis.
Periodicity: Mondays from 17h30 to 19h.