This paper uses occupational employment and wage data for over 270 industries from 1990 to 2017 to estimate the percentage of an industry's annual labor spending on performing regulation-related tasks. We hypothesize that this measure reflects the intensity of regulations that incentivize firm spending on compliance to avoid legal liability or regulatory sanctions. We study the sensitivity of this measure to shocks that change regulatory intensity in the finance and energy sectors. Compared to supply-side measures that count words in regulations, our response-based measure, Regulation Index, reflects broader sources of regulation, can better detect the impact of regulations, and can better distinguish deregulation from regulation. Using microdata, our methodology can also detect increases in regulatory intensity for publicly traded firms relative to privately held firms within an industry following the Sarbanes-Oxley Act of 2002. Our measure has implications for policy assessment and also for economic studies that use regulation changes to draw causal inferences.
Antitrust and Trade Regulation | Business Organizations Law | Consumer Protection Law | Law | Law and Economics | Legislation
Date of this Version
Michael Simkovic and Miao Ben Zhang, "Measuring Regulation: A Labor Task-Based Approach" (August 2019). University of Southern California Legal Studies Working Paper Series. Working Paper 298.