The Effects of Deregulating Retail Operating Hours: Empirical Evidence from Italy

We estimate the impact of deregulating shop hours on the structure of the retail sector and the size and composition of its labor force. To identify the effect of interest, we exploit the staggered implementation of a reform that allowed Italian municipalities to adopt fully flexible operating hours in the late 1990s. Our findings indicate that lifting restrictions on hours increased retail employment by 2.4 percent and increased the number of shops in the affected municipalities by 1.8 percent. In combination with estimates using individual-level data, our results further suggest that retail employment grew more in larger retail operations, with a corresponding movement of the labor force toward permanent employees and away from the self-employed.