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The Impact of Geographic Differences in Human Capital on Service Firm Formation Rates

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Author Info
Zoltan J. Acs ()
Catherine Armington

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Abstract

Although human capital externalities are a key variable in theories of economic growth, there has been little investigation of the mechanism by which these externalities are realized. We examine the relationship between the local levels of human capital and firm formation rates and find that formation rates differ with the share of adults with college degrees, especially for industries that normally require college-educated founders. They also differ strongly with the local concentration of existing establishments in the same sector, especially for industries serving non-local markets, suggesting that an important mechanism is the spillover of relevant knowledge.

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Paper provided by Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy in its series Discussion Papers on Entrepreneurship, Growth and Public Policy with number 2004-15.

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Length: 48 pages
Date of creation: Mar 2004
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Handle: RePEc:esi:egpdis:2004-15

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Keywords: Firm formation Knowledge spillovers Entrepreneurship Human capital Regional growth

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Find related papers by JEL classification:
R1 - Urban, Rural, and Regional Economics - - General Regional Economics
L80 - Industrial Organization - - Industry Studies: Services - - - General
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
O3 - Economic Development, Technological Change, and Growth - - Technological Change

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  1. Zoltan J. Acs & Catherine Armington & Ting Zhang, 2006. "The Determinants of New-firm Survival across Regional Economies," Discussion Papers on Entrepreneurship, Growth and Public Policy 2007-04, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
  2. Mark Drabenstott, 2006. "Rethinking federal policy for regional economic development," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 115-142. [Downloadable!]
  3. Zoltan J. Acs & David B. Audretsch & Pontus Braunerhjelm & Bo Carlsson, 2005. "The Knowledge Spillover Theory of Entrepreneurship," Discussion Papers on Entrepreneurship, Growth and Public Policy 2005-27, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
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  4. David B. Audretsch & Dirk Dohse, 2007. "Location: A Neglected Determinant of Firm Growth," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 143(1), pages 79-107, April. [Downloadable!] (restricted)
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