Compliance Costs of Regulations and Productivity

This study proposes a new approach of measuring the compliance costs of rules and regulations by focusing on labor input and estimating compliance costs based on a survey of workers in Japan. According to the results, the working hours required to comply with the rules and regulations account for over 20% of the total labor input. This cost is higher in the finance and insurance industry, followed by health and welfare; moreover, it is higher in large firms. A large proportion of the working hours of high-wage workers are devoted to compliance tasks. If these costs were halved, overall economic productivity would increase by approximately 8%. This suggests the importance of reducing costs through deregulation and digitalization.

This is the English version of the Japanese Policy Discussion Paper (22-P-022) with some additional information and changes.