The Policy Research Working Paper 10761 examines the impact of government rules and regulations on senior plant managers in less-developed countries. The study finds that these managers spend more time dealing with regulations than their counterparts in richer countries. The paper interprets these findings through the lens of a span-of-control growth model, which suggests that increasing the time burden on top management leads to equilibrium changes in wages, occupational sorting, the size distribution of production plants, and ultimately, to a reduction in aggregate output. The study also finds that these consequences hold even when the time burden is symmetric across all plants. The quantitative results show that increasing the time burden on top management by 10% leads to a 2% reduction in aggregate output. The study concludes that reducing the time burden on top management in less-developed countries could potentially increase economic development.
