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We document that profitability—profit margins—has diverged in Euro-area countries since the introduction of the euro. Changes in profitability only partially overlap with changes in unit labour costs and producer prices, which are the indicators more commonly used in the literature to assess the competitiveness of euro-area member countries. We provide suggestive evidence that changes in profitability...
•We estimate the effects of a reduction in the red tape costs on firm demographics. •We exploit a reform of the One-stop shops (OSS) for doing business in Italy. •The reform reduced the time component of the start-up cost by improving ICT capabilities of the OSS. •Entry rates increased; survival rates of new entrants improved. ...
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