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Table 6 Reduced form and structural estimates of the probability of employment growth conditional on prior employment level inside and outside Enterprise Protection Zones as per equation (6) 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 T = 14 a from Table 4 Placebo 1: T = 20 a Sample excludes L it < 15 Placebo 2: T = 30 a Sample excludes L it < 15
\( {\mathrm{L}}_{\mathrm{it}}\le\ \mathrm{T}-1,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{-}}=1:\ {\upbeta}_{{\mathrm{L}}^{-}}+{\upbeta}_{\mathrm{E}\mathrm{PZ}}+{\upgamma}_{{\mathrm{L}}^{-}} \) 0.09** (0.02) 0.23*** (0.05) 0.25*** (0.03)
Lit = T : βEPZ 0.12* (0.08) 0.31*** (0.10) 0.36*** (0.10)
\( {\mathrm{L}}_{\mathrm{it}}\ge\ \mathrm{T}+1,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{+}}=1:\ {\upbeta}_{{\mathrm{L}}^{+}}+{\upbeta}_{\mathrm{E}\mathrm{PZ}}+{\upgamma}_{{\mathrm{L}}^{+}} \) 0.19** (0.02) 0.20*** (0.01) 0.22*** (0.01)
Reduced form parameters: EPZ i  = 0    
\( {\mathrm{L}}_{\mathrm{it}}\le\ \mathrm{T}-1,\ {\mathrm{E}}_{\mathrm{it}}^{{\mathrm{L}}^{-}}=1:\ {\upbeta}_{{\mathrm{L}}^{-}} \) -0.17** (0.02) 0.01 (0.01) 0.04*** (0.01)
Lit = T: reference
\( {\mathrm{L}}_{\mathrm{it}}\ge\ T+1,\ {\mathrm{E}}_{\mathrm{it}}^{L^{+}}=0:\ {\upbeta}_{{\mathrm{L}}^{+}} \) 0.048** (0.01) 0.049*** (0.01) 0.08*** (0.01)
Structural estimates   
Hypothesis: Relative to nonEPZ firms of like size and vintage b
βEPZ > 0: EPZ firms grow faster at the threshold 0.123** (224) 0.31** (5.7) 0.36** (18)
\( {\upbeta}_{\mathrm{EPZ}}+{\upgamma}_{{\mathrm{L}}^{-}} \) >0: EPZ firms grow faster below the threshold 0.255** (161) 0.219** (21.63) 0.21** (49.4)
\( {\upbeta}_{\mathrm{EPZ}}+{\upgamma}_{{\mathrm{L}}^{+}}>0 \): EPZ firms grow faster above the threshold 0.142** (2952) 0.15** (131) 0.14** (101)
Hypothesis: Relative to same sector firms below the threshold b
\( {\upbeta}_{{\mathrm{L}}^{+}}-{\upbeta}_{{\mathrm{L}}^{-}}>0 \): nonEPZ firms grow faster above the threshold 0.214** (21) 0.048** (22.6) 0.04 ** (17.65)
\( \left({\upbeta}_{{\mathrm{L}}^{+}}+{\upgamma}_{{\mathrm{L}}^{+}}\right)-\left({\upbeta}_{{\mathrm{L}}^{-}}+{\upgamma}_{{\mathrm{L}}^{-}}\right)>0 \): EPZ firms grow faster above the threshold 0.101** (42) -0.03 (42) -0.03 (0.60)
Hypothesis: Relative to EPZ firms at the threshold b
\( {\upgamma}_{{\mathrm{L}}^{-}}=0 \) : EPZ firms grow at a different rate below the threshold 0.133* (3.5) −0.08 (3.5) −0.15 (0.14)
\( {\upgamma}_{{\mathrm{L}}^{+}}=0 \) : EPZ firms grow at a different rate above the threshold 0.020 (0.01) −0.15 (0.01) −0.22 (0.43)
  1. aMarginal effect reproted with attached standard error in parenthesis.
  2. bMarginal effect reported with attached Chi-square statistic in parentheses. Critical value is 3.84 at the .05 significance level.
  3. *significance at the 0.1 level, **significance at the .05 level, ***significance at the .01 level.
  4. EPZ: Export Promotion Zone.