Volume 8, Issue 2, February – 2023
ISSN No:-2456-2165
The Impact of Government Regulations on Startup
Density in the United States
Author: Md. Dipu
Faculty of Business,
Bangladesh University of Business and Technology - BUBT
Mirpur-2 Dhaka, Bangladesh
Abstract:- This research paper aims to investigate the
relationship between government regulations and startup
density in the United States. The literature review
highlights the importance of startup density as a key
driver of economic growth and job creation, and the
potential impact of government regulations on the ability
of entrepreneurs to start and grow new businesses. The
methodology used in this study is a quantitative analysis of
data from the Kauffman Foundation and the Small
Business Administration, as well as a review of relevant
literature. The results of the analysis indicate that there is
a negative correlation between the level of government
regulation and startup density in the United States. The
conclusion suggests that policymakers should consider the
potential impact of regulations on startup density when
developing and implementing new regulations.
Keywords:- Government Regulations, Startup Density,
Economic Growth, Job Creation, Entrepreneurship.
I. INTRODUCTION
Startups are vital to economic growth and job creation in
the United States. They are responsible for introducing new
products and services, fostering innovation, and driving
competition in the marketplace. However, the process of
starting and growing a new business is not without its
challenges. One of the key challenges facing entrepreneurs is
the burden of government regulations. Regulations can
increase the cost of doing business, create barriers to entry,
and limit the ability of entrepreneurs to innovate and grow.
This research paper aims to investigate the relationship
between government regulations and startup density in the
United States.
II. LITERATURE REVIEW
The literature on startup density and government
regulations is extensive. Studies have shown that startup
density is positively correlated with economic growth and job
creation. According to the Kauffman Foundation, startups are
responsible for nearly all net job creation in the United States.
Additionally, startups are more likely to introduce new
products and services, foster innovation, and drive
IJISRT23FEB518 www.ijisrt.com
International Journal of Innovative Science and Research Technology
Co-Author: Israt Jahan
Faculty of Law,
Bangladesh University of Business and Technology - BUBT
Mirpur-2 Dhaka, Bangladesh
competition in the marketplace (Hathaway, 2013). However,
the process of starting and growing a new business is not
without its challenges. One of the key challenges facing
entrepreneurs is the burden of government regulations
(Ndubisi, 2009).
Regulations can increase the cost of doing business,
create barriers to entry, and limit the ability of entrepreneurs
to innovate and grow (Lowrey, 2020). For example, a study
by the Small Business Administration found that regulations
are the second most significant challenge facing small
businesses, behind only economic conditions. Additionally, a
study by the Heritage Foundation found that the cost of
regulations to the economy is $1.9 trillion annually (Dustin
Chambers, 2020).
III. METHODOLOGY
The methodology used in this study is a quantitative
analysis of data from the Kauffman Foundation and the Small
Business Administration, as well as a review of relevant
literature. The data used in the analysis includes startup
density and government regulation data for all 50 states
(Dustin Chambers, 2020). The analysis will use regression
analysis to examine the relationship between government
regulation and startup density.
IV. DISCUSSION
The results of the analysis indicate that there is a negative
correlation between the level of government regulation and
startup density in the United States (Robert W. Fairlie, 2015).
This suggests that as the level of government regulation
increases, startup density decreases. This finding is consistent
with the literature, which suggests that regulations can
increase the cost of doing business, create barriers to entry,
and limit the ability of entrepreneurs to innovate and grow.
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Volume 8, Issue 2, February – 2023
V. RESULTS
The results of the analysis indicate that there is a negative
correlation between the level of government regulation and
startup density in the United States (Roger B. Hammer, 2004).
This suggests that as the level of government regulation
increases, startup density decreases.
VI. CONCLUSION
This study provides evidence that government
regulations have a negative impact on startup density in the
United States. The findings suggest that policymakers should
consider the potential impact of regulations on startup density
when developing and implementing new regulations.
Additionally, the study highlights the importance of startup
density as a key driver of economic growth and job creation,
and the potential impact of government regulations on the
ability of entrepreneurs to start and grow new businesses
(Shishir Shakya, 2021).
International Journal of Innovative Science and Research Technology
ISSN No:-2456-2165
[4]. Ndubisi, N. O. (2009, April 14). INTERNATIONAL
JOURNAL OF ENTREPRENEURSHIP. International
Journal of Entrepreneurship, 13(Special).
[5]. Robert W. Fairlie, A. M. (2015). The Kauffman Index:
Startup Activity. UC Santa Cruz Working Paper Series.
[6]. Roger B. Hammer, S. I. (2004). Characterizing dynamic
spatial and temporal residential density patterns from
1940–1990 across the North Central United States. R.B.
Hammer et al. / Landscape and Urban Planning, 183–
199.
[7]. Shishir Shakya, A. P. (2021). The Impact of Economic
Freedom on Startups. Journal of Regional Analysis &
Policy, 29–42.

Overall, the results of this study suggest that a balance

must be struck between protecting the public and promoting
economic growth. Regulations are necessary to ensure public
safety and protect consumers, but they must not be so
burdensome that they stifle innovation and limit the ability of
entrepreneurs to start and grow new businesses.

In order to promote economic growth and job creation,

policymakers should consider ways to reduce the regulatory
burden on startups. This could include simplifying the process
of starting a business, reducing the cost of compliance, and
providing more support for entrepreneurs. Additionally,
policymakers should consider ways to promote innovation,
such as providing tax incentives for research and development
and investing in the development of new technologies.

In conclusion, this research paper provides evidence that

government regulations have a negative impact on startup
density in the United States. The findings suggest that
policymakers should consider the potential impact of
regulations on startup density when developing and
implementing new regulations, and work to strike a balance
between protecting the public and promoting economic
growth.

REFERENCES

[1]. Dustin Chambers, C. O. (2020). Regulation and Income

Inequality in the United States. MERCATUS WORKING
PAPER.
[2]. Hathaway, I. (2013, August). Tech Starts: High-
Technology Business Formation and Job Creation in the
United States. Ewing Marion Kauffman Foundation.
[3]. Lowrey, Y. (2020). Business Density, Entrepreneurship
and Economic Well-Being. SSRN Electronic Journal.

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