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The Cost of Regulatory Compliance

The Cost of Regulatory Compliance

by Starling Insights

Starling Insights Editorial Board

Feb 06, 2023


In a paper entitled "The Cost of Regulatory Compliance in the United States," Francesco Trebbi (University of California, Berkeley) and Miao Ben Zhang (University of Southern California) quantified the compliance costs for US firms between 2002 and 2014. They found that a typical company spent 1.34% of its total salary expenditure on employees engaged in regulatory compliance.

The researchers also analyzed how firm size impacts regulatory compliance outlay. "[E]conomies of scale in regulatory compliance are a key feature of any regulatory architecture," they wrote. "Regulation may also introduce incentives toward concentration and may act as a barrier to entry, favoring large incumbents."

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