Occupational Licensing restrictions and early-stage entrepreneurship: a US state-level analysis

Various literatures have evaluated the economic consequences associated with both entrepreneurship and occupational licencing. However, there has been a relative lack of research that attempts to tie the two together. This study empirically investigates if and how occupational licencing restrictions impact early-stage entrepreneurship across US states. By utilizing a new index of state licensure restrictiveness, various measures from the Kauffman Index of Entrepreneurial Activity, along with establishment birth and death rates, our study finds that early-stage entrepreneurship and establishment deaths are negatively and significantly associated with more restrictive occupational licencing, though the channels are nuanced. Implications are discussed.