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The determinants of new-firm survival across regional economies: The role of human capital stock and knowledge spillover


  • Zoltan J. Acs
  • Catherine Armington
  • Ting Zhang


Motivated by differences in new-firm survival across regions, this paper explores the impact of regional human capital on new-firm survival rates. New-firm survival is interpreted through formation rates of surviving versus closed firms in the service sector. By incorporating knowledge spillovers through a geographical variation model for Labour Market Areas, we empirically test the relationship between regional human capital stocks and new-firm survival. The expected positive relationship between regional human capital and new-firm survival is supported for the period 1993-1995, but is not as strong for the recession period 1990-1992. Controlling for human capital, the new-firm survival rate is negatively related to service sector specialisation and positively related to all-industry intensity, suggesting that city size and diversity may be an important determinant of new-firm survival in both periods. Copyright (c) 2007 the author(s). Journal compilation (c) 2007 RSAI.

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  • Zoltan J. Acs & Catherine Armington & Ting Zhang, 2007. "The determinants of new-firm survival across regional economies: The role of human capital stock and knowledge spillover," Papers in Regional Science, Wiley Blackwell, vol. 86(3), pages 367-391, August.
  • Handle: RePEc:bla:presci:v:86:y:2007:i:3:p:367-391

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