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Investigating the Anatomy of the Employment Effects of New Business Formation

Author

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  • Michael Fritsch

    (Friedrich Schiller University Jena, School of Economics and Business Administration)

  • Florian Noseleit

    (Friedrich Schiller University Jena, School of Economics and Business Administration)

Abstract

Recent empirical research has found that the effect of new business formation on employment emerges over a period of about ten years and has identified a 'wave' pattern of these effects. In this study, we decompose the overall contribution of new business formation on employment change into direct and indirect effects. The results indicate that indirect effects of new business formation are quantitatively much more important than the direct effects. Furthermore, we find that regional differences of the employment change generated by new business formation can to a large part be explained by respective differences of the indirect effects. Hence, the interaction of the start-ups with their regional environment plays a great role for explaining their impact on regional development.

Suggested Citation

  • Michael Fritsch & Florian Noseleit, 2009. "Investigating the Anatomy of the Employment Effects of New Business Formation," Jena Economics Research Papers 2009-001, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2009-001
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    More about this item

    Keywords

    Entrepreneurship; new business formation; regional development; direct and indirect effects;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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