Regulatory Compliance Burdens

Literature Review and Synthesis
October 19, 2022
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Government regulation is intended to provide a variety of social benefits, but it does so at a cost. Regulations that address a compelling public need, such as material failures of private markets to internalize social costs, can potentially support and improve upon market transactions and yield important economic, social, and environmental benefits. However, if poorly designed or implemented, they can cause serious economic distortions that lower economic growth or GDP, damage investment and competitiveness and reduce entrepreneurship. They can impose unnecessary administrative burdens as well as barriers to entry into the market of smaller and newer, more innovative, firms.

It is thus in the public interest to strive to maximize the net social benefits of regulation -- the difference between the social benefits and the social costs of regulation, where "social" costs and benefits refer to the private and public resources available to society.

This paper reviews and synthesizes available literature on the potential economic impacts of reducing regulatory compliance and administrative burdens on business, while holding regulatory goals and outcomes constant. The paper identifies ways in which regulations can be made more efficient (less costly) while maintaining the existing scope (policy goal) of the regulations. The paper summarizes empirical estimates of the potential cost savings to be gained from making regulations more efficient, and discusses how reducing regulatory cost inefficiencies contribute to economic development and growth.

Support for this project was provided by The Pew Charitable Trusts. The views expressed herein are those of the authors and do not necessarily reflect the views of The Pew Charitable Trusts nor an official position of the GW Regulatory Studies Center or the George Washington University.

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