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The Effect of New Business Formation on Employment - The Dominance of Density

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Author Info

  • Alexandra Schroeter

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

Abstract

Empirical analyses show that the employment effects of start-ups are highest in agglomerations, whereas moderately congested areas exhibit only modest effects, and weak or even no significant effects could be found in rural regions. This paper will set out to show that these discrepancies arise from specific characteristics of urban areas. The magnitude of the employment effects of entry in agglomerations can, therefore, be regarded as a further kind of agglomeration benefit which has not been discussed in the literature yet. In particular, it is explained how the distinct characteristics of urban areas contribute to the emergence of high-quality start-ups that are known to cause larger employment effects than other types of new businesses. In addition, this paper argues that the relatively intense competition in urban areas further stimulates the economic effects of new business formation in agglomerations.

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File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00145159
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Bibliographic Info

Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-019.

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Date of creation: 05 Mar 2009
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Handle: RePEc:jrp:jrpwrp:2009-019

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Related research

Keywords: Entrepreneurship; new business formation; regional development; entrepreneurship policy;

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Cited by:
  1. Michael Fritsch & Alexandra Schroeter, 2011. "Why does the effect of new business formation differ across regions?," Small Business Economics, Springer, vol. 36(4), pages 383-400, May.
  2. Marcus Dejardin & Michael Fritsch, 2011. "Entrepreneurial dynamics and regional growth," Small Business Economics, Springer, vol. 36(4), pages 377-382, May.
  3. Michael Wyrwich, 2011. "New business formation and regional growth across regions with distinct initial industry structures," ERSA conference papers ersa10p656, European Regional Science Association.

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