Compliance Costs of Regulations and Firm Productivity

Author Name MORIKAWA Masayuki (President and CRO, RIETI)
Creation Date/NO. August 2022 22-P-022
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This study proposes a new method of measuring compliance costs of regulations by focusing on labor input and estimates the compliance costs in Japan based on a survey of workers. According to the results, the working hours required to comply with rules and regulations account for more than 20% of total labor input. By industry, this cost is higher in the finance and insurance industry, followed by the health and welfare industry, and by firm size, it is higher in large firms. A large proportion of the working hours of high-wage workers are devoted to these tasks. If these costs were halved, overall economic productivity would increase by about 8%. This suggests the importance of reducing costs through deregulation and digitalization.

The English version of this paper is 22-P-025.