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The Determinants of New-firm Survival across Regional Economies

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Author Info
Zoltan J. Acs
Catherine Armington
Ting Zhang

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Abstract

Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labor Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialization and positively related to all industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods.

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Publisher Info
Paper provided by Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group in its series Papers on Entrepreneurship, Growth and Public Policy with number 2007-04.

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Length: 40 pages
Date of creation: Dec 2006
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Handle: RePEc:esi:egpdis:2007-04

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Related research
Keywords: New-Firm Survival; Human Capital; Knowledge Spillovers; Entrepreneurship; Labor Market Area;

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

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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. Zoltan Acs & Catherine Armington, 2004. "Employment Growth and Entrepreneurial Activity in Cities," Regional Studies, Taylor and Francis Journals, vol. 38(8), pages 911-927, January. [Downloadable!] (restricted)
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  2. Zoltan J. Acs & Catherine Armington, 2004. "The Impact of Geographic Differences in Human Capital on Service Firm Formation Rates," Papers on Entrepreneurship, Growth and Public Policy 2004-15, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
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  3. Littunen, Hannu, 2000. " Networks and Local Environmental Characteristics in the Survival of New Firms," Small Business Economics, Springer, vol. 15(1), pages 59-71, August. [Downloadable!] (restricted)
  4. Ian Smith & Zoltan J. Acs & Felix R. FitzRoy, 2002. "High-technology employment and R&D in cities: Heterogeneity vs specialization," The Annals of Regional Science, Springer, vol. 36(3), pages 373-386. [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. Zoltan Acs & Pamela Mueller, 2008. "Employment effects of business dynamics: Mice, Gazelles and Elephants," Small Business Economics, Springer, vol. 30(1), pages 85-100, January. [Downloadable!] (restricted)
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