The Effect of New Business Formation on Employment - The Dominance of Density
AbstractEmpirical 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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Bibliographic InfoPaper provided by Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics in its series Jena Economic Research Papers with number 2009-019.
Date of creation: 05 Mar 2009
Date of revision:
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 - - - 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-03-14 (All new papers)
- NEP-ENT-2009-03-14 (Entrepreneurship)
- NEP-GEO-2009-03-14 (Economic Geography)
- NEP-LAB-2009-03-14 (Labour Economics)
- NEP-URE-2009-03-14 (Urban & Real Estate Economics)
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- 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.
- Michael Fritsch & Alexandra Schroeter, 2007. "Why Does the Effect of New Business Formation Differ Across Regions?," Jena Economic Research Papers 2007-077, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
- Marcus Dejardin & Michael Fritsch, 2011. "Entrepreneurial dynamics and regional growth," Small Business Economics, Springer, vol. 36(4), pages 377-382, May.
- 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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