Episode Notes: Aggregate Implications of Size-Dependent Distortions

• Introduction:
  • Topic: Impact of regulations on the growth of small businesses and their ripple effect on the overall economy.
• Size-Dependent Distortions Defined:
  • Regulations that impose an implicit tax on small businesses making it costlier for them to expand.
  • Example: French labor laws which target firms with 50+ employees, leading many to circumvent the rule by hiring part-timers or avoiding expansion.
• Effects on Business Growth:
  • In the U.S., new firms created around 2.9 million jobs yearly between 1980-2010.
  • A notable fraction of these firms fail shortly or never grow beyond a certain point.
  • Regulations  ...