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Why So Many Local Entrepreneurs?

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  • Claudio Michelacci

    ()

  • Olmo Silva

    ()
    (CEMFI, Centro de Estudios Monetarios y Financieros)

Abstract

We document that the fraction of entrepreneurs who work in the region where they were born is significantly higher than the corresponding fraction for dependent workers. This difference is more pronounced in more developed regions and positively related to the degree of local financial development. Frims created by locals are more valuable and bigger (in terms of capital and employment), operate with more capital intensive technologies, and are able to obtain greater financing per unit of capital invested, than firms created by non-locals. This evidence suggests that there are so many local entrepreneurs because locals can better exploit the financial opportunities available in the region where they were born. This can help explaining how local financial development cause presistent disparities in entrepreneurial activity, technology, and income.

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Bibliographic Info

Paper provided by CEMFI in its series Working Papers with number wp2005_0506.

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Date of creation: May 2005
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Handle: RePEc:cmf:wpaper:wp2005_0506

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Keywords: Entreprenurship; economic and financial development; social capital.;

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