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New business formation and employment growth: some evidence for the Spanish manufacturing industry

  • Josep Arauzo Carod

    ()

  • Daniel Liviano Solís
  • Mònica Martín Bofarull

This paper explores the effects of new business formation on employment growth in Spanish manufacturing industries. New firms are believed to make an important contribution to economic growth but the extent of this contribution is unclear. We consider time lags of new firm formation as explanatory variables of employment change and identify how long the effect of new firm entries on employment lasts. Our main results show that the effects of new business formation are positive in the short term, negative in the medium term and positive in the long term, thus confirming the existence of indirect supply-side effects found in similar studies for other countries. Key words: regional growth, firm entry, time lags and Spanish economy. JEL classifications: L00, L60, R11, R12

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File URL: http://hdl.handle.net/10.1007/s11187-007-9051-4
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Article provided by Springer in its journal Small Business Economics.

Volume (Year): 30 (2008)
Issue (Month): 1 (January)
Pages: 73-84

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Handle: RePEc:kap:sbusec:v:30:y:2008:i:1:p:73-84
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100338

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  1. Ana Martín-Marcos & Jordi Jaumandreu, 2004. "Entry, exit and productivity growth: Spanish manufacturing during the eighties," Spanish Economic Review, Springer, vol. 6(3), pages 211-226, October.
  2. Fritsch, Michael, 2004. "Entrepreneurship, entry and performance of new business compared in two growth regimes: East and West Germany," Freiberg Working Papers 2004,09, TU Bergakademie Freiberg, Faculty of Economics and Business Administration.
  3. Arauzo Carod, Josep Maria & Segarra Blasco, Agustí, 2004. "The Determinants of Entry are not Independent of Start-up Size: Some evidence from Spanish manufacturing," Working Papers 2072/1775, Universitat Rovira i Virgili, Department of Economics.
  4. Rui Baptista & Vítor Escária & Paulo Madruga, 2008. "Entrepreneurship, regional development and job creation: the case of Portugal," Small Business Economics, Springer, vol. 30(1), pages 49-58, January.
  5. Baldwin, John R. & Harchaoui, Tarek, 2002. "Productivity Growth in Canada," Productivity Growth in Canada, Statistics Canada, Economic Analysis, number stcb6e, December.
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  7. Wagner, Joachim, 1994. "The Post-entry Performance of New Small Firms in German Manufacturing Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 42(2), pages 141-54, June.
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  9. Michael Fritsch & Pamela Mueller & Antje Weyh, 2005. "Direct and indirect effects of new business formation on regional employment," Applied Economics Letters, Taylor & Francis Journals, vol. 12(9), pages 545-548.
  10. Michael Fritsch & Pamela Mueller, 2004. "Effects of New Business Formation on Regional Development over Time," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 961-975.
  11. Mata, Jose & Portugal, Pedro, 1994. "Life Duration of New Firms," Journal of Industrial Economics, Wiley Blackwell, vol. 42(3), pages 227-45, September.
  12. Michael Fritsch & Pamela Mueller, 2004. "The Effects of New Business Formation on Regional Development over Time," Papers on Entrepreneurship, Growth and Public Policy 2004-36, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  13. Johnson, P S, 1983. "New Manufacturing Firms in the U.K. Regions," Scottish Journal of Political Economy, Scottish Economic Society, vol. 30(1), pages 75-79, February.
  14. Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988. "Patterns of Firm Entry and Exit in U.S. Manufacturing Industries," RAND Journal of Economics, The RAND Corporation, vol. 19(4), pages 495-515, Winter.
  15. Agustí Segarra & Maria Callejón, 2002. "New Firms' Survival and Market Turbulence: New Evidence from Spain," Review of Industrial Organization, Springer, vol. 20(1), pages 1-14, February.
  16. Hall, Bronwyn H, 1987. "The Relationship between Firm Size and Firm Growth in the U.S. Manufacturing Sector," Journal of Industrial Economics, Wiley Blackwell, vol. 35(4), pages 583-606, June.
  17. Aki Kangasharju, 2000. "Regional variations in firm formation: Panel and cross-section data evidence from Finland," Papers in Regional Science, Springer, vol. 79(4), pages 355-373.
  18. repec:dgr:uvatin:19990068 is not listed on IDEAS
  19. Agarwal, Rajshree & Audretsch, David B, 2001. "Does Entry Size Matter? The Impact of the Life Cycle and Technology on Firm Survival," Journal of Industrial Economics, Wiley Blackwell, vol. 49(1), pages 21-43, March.
  20. Zoltan J. Acs & Catherine Armington, 2004. "Employment Growth and Entrepreneurial Activity in Cities," Papers on Entrepreneurship, Growth and Public Policy 2004-13, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  21. David Audretsch & Michael Fritsch, 2002. "Growth Regimes over Time and Space," Regional Studies, Taylor & Francis Journals, vol. 36(2), pages 113-124.
  22. Storey, David J & Jones, A M, 1987. "New Firm Formation--A Labour Market Approach to Industrial Entry," Scottish Journal of Political Economy, Scottish Economic Society, vol. 34(1), pages 37-51, February.
  23. Adriaan Van Stel & David Storey, 2004. "The Link between Firm Births and Job Creation: Is there a Upas Tree Effect?," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 893-909.
  24. Audretsch, David B. & Santarelli, Enrico & Vivarelli, Marco, 1999. "Start-up size and industrial dynamics: some evidence from Italian manufacturing," International Journal of Industrial Organization, Elsevier, vol. 17(7), pages 965-983, October.
  25. repec:cup:cbooks:9780521633574 is not listed on IDEAS
  26. Callejon, Maria & Segarra, Agusti, 1999. " Business Dynamics and Efficiency in Industries and Regions: The Case of Spain," Small Business Economics, Springer, vol. 13(4), pages 253-71, December.
  27. Geroski, Paul A, 1989. "Entry, Innovation and Productivity Growth," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 572-78, November.
  28. David B. Audretsch, 1995. "Innovation and Industry Evolution," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262011468, June.
  29. JosÈ C. FariÒas & Sonia Ruano, 2004. "The Dynamics of Productivity: A Decompostion Approach Using Distribution Functions," Small Business Economics, Springer, vol. 22(3_4), pages 237-251, 04.
  30. Audretsch, David B & Mahmood, Talat, 1995. "New Firm Survival: New Results Using a Hazard Function," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 97-103, February.
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