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What determines entrepreneurial clusters?

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  • Luigi Guiso
  • Fabiano Schivardi

Abstract

We contrast two potential explanations of the substantial di¤erences in entrepreneurial activity observed across geographical areas: entry costs and external effects. We extend the Lucas model of entrepreneurship to allow for heterogeneous entry costs and for externalities that shift the distribution of entrepreneurial talents. We show that these assumptions have opposite predictions on the relation between entrepreneurial activity and .rm level TFP: with di¤erent entry costs, in areas with more entrepreneurs firms' average productivity should be lower and vice versa. We test these implications on a sample of Italian firms and unambiguously reject the entry costs explanation in favor of the externalities one. We also investigate the sources of external e¤ects, finding robust evidence that learning externalities are an important determinant of cross-sectional differences in entrepreneurial activity.

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Bibliographic Info

Paper provided by European University Institute in its series Economics Working Papers with number ECO2007/48.

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Date of creation: 2007
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Handle: RePEc:eui:euiwps:eco2007/48

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Keywords: Entrepreneurship; clustering; agglomeration economies;

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Citations

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Cited by:
  1. Luigi Guiso & Aldo Rustichini, 2011. "What drives women out of entrepreneurship? The joint role of testosterone and culture," EIEF Working Papers Series 1102, Einaudi Institute for Economics and Finance (EIEF), revised Jan 2011.
  2. Sabrina Di Addario & Daniela Vuri, 2010. "Entrepreneurship and Market Size. The Case of Young College Graduates in Italy," CESifo Working Paper Series 3145, CESifo Group Munich.
  3. Mina Baliamoune-Lutz, 2008. "On Growth and Development," ICER Working Papers 13-2008, ICER - International Centre for Economic Research.
  4. Fernanda Llussa, 2011. "Determinants of Entrepreneurship: Are Women Different?," FEUNL Working Paper Series wp555, Universidade Nova de Lisboa, Faculdade de Economia.
  5. I. Sulis & M. Porcu, 2008. "Assessing the Effectiveness of a Stochastic Regression Imputation Method for Ordered Categorical Data," Working Paper CRENoS 200804, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  6. G. Marletto, 2007. "Crossing The Alps: Three Transport Policy Options," Working Paper CRENoS 200712, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  7. Baliamoune-Lutz, Mina, 2009. "Entrepreneurship and Reforms in Developing Countries," Working Paper Series UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER).
  8. Silvia Ardagna & Annamaria Lusardi, 2008. "Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints," NBER Working Papers 14012, National Bureau of Economic Research, Inc.
  9. Silvia Ardagna & Annamaria Lusardi, 2009. "Where does regulation hurt? Evidence from new businesses across countries," NBER Working Papers 14747, National Bureau of Economic Research, Inc.
  10. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
  11. M. Pitzalis & I. Sulis & M. Porcu, 2008. "Differences of Cultural Capital among Students in Transition to University. Some First Survey Evidences," Working Paper CRENoS 200805, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  12. O. Carboni & G. Medda, 2007. "Government Size and the Composition of Public Spending in a Neoclassical Growth Model," Working Paper CRENoS 200701, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  13. Emil PAPAZOV, 2011. "The Role of Entrepreneurship for Cluster Formation in the Economy," REVISTA DE MANAGEMENT COMPARAT INTERNATIONAL/REVIEW OF INTERNATIONAL COMPARATIVE MANAGEMENT, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 12(4), pages 839-846, October.
  14. Silvia Ardagna & Annamaria Lusardi, 2010. "Explaining International Differences in Entrepreneurship: The Role of Individual Characteristics and Regulatory Constraints," NBER Chapters, in: International Differences in Entrepreneurship, pages 17-62 National Bureau of Economic Research, Inc.
  15. Giuseppe Croce & Edoardo Di Porto & Emanuela Ghignoni & Andrea Ricci, 2013. "Employer education, agglomeration and workplace training: poaching vs knowledge spillovers," Working Papers 162, University of Rome La Sapienza, Department of Public Economics.

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