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Rand study examines the effect of policy on entrepreneurship and small businesses
Date:12/11/2007

businesses have actually increased their ability to offer benefits or reduced their insurance premiums.

Moreover, the study provides evidence that some small businesses added an employee or two in order to avoid having to purchase health insurance in the more highly regulated market that was intended to benefit these very businesses.

Researchers found that regulations can have both positive and negative effects on smaller businesses, and that regulations are not always systematically bad for entrepreneurs. For example, a review of the evidence on the response of large and small businesses to the Sarbanes-Oxley Act suggests that it has had a mixture of positive and negative effects on small businesses.

Research from the Kauffman-RAND Institute for Entrepreneurship Public Policy suggests possible directions for future policy that achieves a better balance between the interest in restricting business behavior through regulation and the desire to encourage small businesses and entrepreneurs.

For example, one study summarized in the report suggests that health and safety enforcement efforts, rather than treating all small establishments in the same way, might instead target the riskiest small enterprises. The study suggests regulators focus on medium-sized businesses (20 to 999 employees), which were found to have the highest rate of fatal workplace accidents among small establishments.


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Contact: Jessica Goldings
MEDIA@RAND.ORG
703-413-1100
RAND Corporation
Source:Eurekalert

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