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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)

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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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Publisher Info
Paper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics, Thueringer Universitaets- und Landesbibliothek in its series Jena Economic Research Papers in Economics 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;

Find related papers by JEL classification:
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
O1 - Economic Development, Technological Change, and Growth - - Economic Development
O18 - Economic Development, Technological Change, and Growth - - Economic Development - - - Regional, Urban, and Rural Analyses
R11 - Urban, Rural, and Regional Economics - - General Regional Economics - - - Analysis of Growth, Development, and Changes

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This page was last updated on 2009-11-18.

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