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Table 5 Reduced form and structural estimates of the probability of firm death conditional on prior employment level inside and outside Enterprise Protection Zones as per equation (7) using Probit model with cluster robust standard errors

From: Mandatory costs by firm size thresholds: firm location, growth and death in Sri Lanka

Reduced form parameters: EPZ i  = 1 Marginal effect a
\( {\mathrm{L}}_{\mathrm{it}}\le 13,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{-}}=1:\ {\upbeta}_{{\mathrm{L}}^{-}}+{\upbeta}_{\mathrm{E}\mathrm{PZ}}+{\upgamma}_{{\mathrm{L}}^{-}} \) −0.073** (0.011)
Lit = 14 : βEPZ −0.032 (0.062)
\( {\mathrm{L}}_{\mathrm{it}}\ge 15,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{+}}=1:\ {\upbeta}_{{\mathrm{L}}^{+}}+{\upbeta}_{\mathrm{E}\mathrm{PZ}}+{\upgamma}_{{\mathrm{L}}^{+}} \) −0.093** (0.009)
Reduced form parameters: EPZi = 0  
\( {\mathrm{L}}_{\mathrm{it}}\le 13,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{-}}=1:\ {\upbeta}_{{\mathrm{L}}^{-}} \) 0.023** (0.011)
Lit = 14: reference
\( {\mathrm{L}}_{\mathrm{it}}\ge 15,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{+}}=0:\ {\upbeta}_{{\mathrm{L}}^{+}} \) 0.004 (0.012)
Structural estimates
Hypothesis: Relative to nonEPZ firms of like size and vintage… Marginal effect b
βEPZ < 0: EPZ firms survive more readily at the threshold −0.032** (66.4)
\( {\upbeta}_{\mathrm{EPZ}}+{\upgamma}_{{\mathrm{L}}^{-}}<0 \): EPZ firms survive more readily below the threshold −0.096** (72.6)
\( {\upbeta}_{\mathrm{EPZ}}+{\upgamma}_{{\mathrm{L}}^{+}}<0 \): EPZ firms survive more readily above the threshold −0.096** (30.1)
Hypothesis: Relative to firms in the same sector below the threshold…  
\( {\upbeta}_{{\mathrm{L}}^{+}}-{\upbeta}_{{\mathrm{L}}^{-}}<0 \): nonEPZ firms survive more readily above the threshold −0.022 (1.22)
\( \left({\upbeta}_{{\mathrm{L}}^{+}}+{\upgamma}_{{\mathrm{L}}^{+}}\right)-\left({\upbeta}_{{\mathrm{L}}^{-}}+{\upgamma}_{{\mathrm{L}}^{-}}\right)<0 \): EPZ firms survive more readily above the threshold −0.020 (0.266)
Hypothesis: Relative to EPZ firms at the threshold….  
\( {\upgamma}_{{\mathrm{L}}^{-}}=0 \): EPZ firms below the threshold have a different survival rate −0.064 (1.22)
\( {\upgamma}_{{\mathrm{L}}^{+}}=0 \) : EPZ firms above the threshold have a different survival rate −0.065 (1.66)
  1. Log-likelihood value of −77956.7 with 85% of the observation predicted correctly.
  2. aMarginal effect reported with attached standard error in parenthesis.
  3. bMarginal effect reported with attached Chi-square statistic in parentheses. Critical value is 3.84 at the .05 significance level.
  4. *significance at the 0.1 level. **significance at the .05 level.
  5. EPZ: Export Promotion Zone.