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The effects of new firm formation on regional development over time: The case of Great Britain

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Author Info
Pamela Mueller ()
André van Stel ()
David J. Storey

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Abstract

This paper re-examines the link between new firm formation and subsequent employment growth. It investigates whether it is possible to have the wrong type of entrepreneurship - defined as new firm formation which leads to zero or even negative subsequent employment growth. It uses a very similar approach to that of Fritsch and Mueller (2004), confirming their findings that the employment impact of new firm formation is in three discrete phases. Then, using data for Great Britain, the paper shows the employment impact of new firm formation is significantly positive in England, but zero in Scotland where formation rates are much lower. It also shows that, in the low enterprise counties of GB, new firm formation has a negative effect on employment, implying that we find that the "wrong type of entrepreneurship" is possible.

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Publisher Info
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 2006-24.

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Length: 23 pages
Date of creation: Oct 2006
Date of revision:
Handle: RePEc:esi:egpdis:2006-24

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Related research
Keywords: New firm formation employment growth Great Britain low entrepreneurial regions

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Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Adriaan J. van Stel & David J. Storey, 2004. "The link between firm births and job creation: Is there a Upas Tree effect?," Discussion Papers on Entrepreneurship, Growth and Public Policy 2004-33, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
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  2. Granger, C W J, 1969. "Investigating Causal Relations by Econometric Models and Cross-Spectral Methods," Econometrica, Econometric Society, vol. 37(3), pages 424-38, July. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Martin Carree & Roy Thurik, 2006. "The Lag Structure of the Impact of Business Ownership on Eco-nomic Performance in OECD Countries," Discussion Papers on Entrepreneurship, Growth and Public Policy 2006-02, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
  2. Stel, A.J. van & Suddle, K., 2005. "The Impact of New Firm Formation on Regional Development in the Netherlands," Research Paper ERS-2005-075-ORG Revision, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni. [Downloadable!]
    Other versions:
  3. Zoltan Acs & Pamela Mueller, 2006. "Employment effects of business dynamics: Mice, Gazelles and Elephants," Discussion Papers on Entrepreneurship, Growth and Public Policy 2006-23, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
  4. Michael Fritsch & Pamela Mueller, 2006. "The Effect of New Business Formation on Regional Development over Time: The Case of Germany," Discussion Papers on Entrepreneurship, Growth and Public Policy 2006-19, Max Planck Institute of Economics, Group for Entrepreneurship, Growth and Public Policy. [Downloadable!]
    Other versions:
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