Urbanization and start-up rates in different geographies: Belgium, the Netherlands, and Sweden

This study addresses the mediating role of settlement patterns in the relationship between urbanization and start-up activity. Places do not operate in a vacuum and to understand the effect of “own” density on start-up patterns, we need to account for the urban spillovers or borrowed size that they may experience from other places nearby. The results can explain the empirical ambiguity in the relationship between urbanization and start-up patterns: the relationship between urbanization and start-up rates becomes more similar between countries when controlling for country-specific settlement patterns by including a spatially lagged urbanization variable and variables measuring the distance to urban centers. Accounting for the relative location of places and relevant sorting effects, we find that “own” density has a consistently negative effect on start-up activity. Yet, access to other places has a generally positive effect. This implies that nearby regions profit from the advantages offered by urban environments without having to deal with the costs involved.