IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Entrepreneurship and market size. The case of young college graduates in Italy

  • Sabrina Di Addario

    ()

    (Bank of Italy)

  • Daniela Vuri

    ()

    (University of Rome Tor Vergata)

We analyse empirically the effects of urbanization on Italian college graduates' work possibilities as entrepreneurs three years after graduation. We find that doubling the population density of the province of work reduces the chances of being an entrepreneur by 2-3 percentage points. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Provincial competition, urban amenities and disamenities, cost of labour, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for more than half of the negative urbanization penalty. Our result cannot be explained by the presence of negative differentials in returns to entrepreneurship between the most and the least densely populated areas either. In fact, as long as they succeed in entering the most densely populated markets, young entrepreneurs are able to reap the benefits of urbanization externalities: doubling the population density of the province of work increases entrepreneurs' net monthly earnings by 2-3 per cent.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.bancaditalia.it/pubblicazioni/temi-discussione/2010/2010-0775/en_tema_775.pdf
Download Restriction: no

Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 775.

as
in new window

Length:
Date of creation: Sep 2010
Date of revision:
Handle: RePEc:bdi:wptemi:td_775_10
Contact details of provider: Postal: Via Nazionale, 91 - 00184 Roma
Web page: http://www.bancaditalia.it

More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Rice, Patricia & Venables, Anthony J, 2004. "Spatial Determinants of Productivity: Analysis for the Regions of Great Britain," CEPR Discussion Papers 4527, C.E.P.R. Discussion Papers.
  2. Alessandro Arrighetti & Andrea Lasagni & Gilberto Seravalli, 2003. "Capitale sociale, associazionismo economico e istituzioni: indicatori statistici di sintesi," Rivista di Politica Economica, SIPI Spa, vol. 93(4), pages 47-88, July-Augu.
  3. Pierre-Philippe COMBES & Gilles DURANTON & Laurent GOBILLON & Diego PUGA & Sébastien ROUX, 2009. "The Productivity Advantages of Large Cities : Distinguishing Agglomeration from Firm Selection," Working Papers 2009-08, Centre de Recherche en Economie et Statistique.
  4. Brunello, Giorgio & Cappellari, Lorenzo, 2005. "The Labour Market Effects of Alma Mater: Evidence from Italy," IZA Discussion Papers 1562, Institute for the Study of Labor (IZA).
  5. Henderson, J Vernon, 1983. "Industrial Bases and City Sizes," American Economic Review, American Economic Association, vol. 73(2), pages 164-68, May.
  6. Torrini, Roberto, 2005. "Cross-country differences in self-employment rates: the role of institutions," Labour Economics, Elsevier, vol. 12(5), pages 661-683, October.
  7. L. Guiso & F. Schivardi, 2006. "What determines entrepreneurial clusters?," Working Paper CRENoS 200616, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  8. Rosenthal, Stuart S. & Strange, William C., 2008. "The attenuation of human capital spillovers," Journal of Urban Economics, Elsevier, vol. 64(2), pages 373-389, September.
  9. Silva, Olmo, 2006. "The Jack-of-All-Trades Entrepreneur: Innate Talent or Acquired Skill?," IZA Discussion Papers 2264, Institute for the Study of Labor (IZA).
  10. Raghuram G. Rajan & Luigi Zingales, . "Financial Dependence and Growth," CRSP working papers 344, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
  11. Claudio Michelacci & Olmo Silva, 2007. "Why So Many Local Entrepreneurs?," The Review of Economics and Statistics, MIT Press, vol. 89(4), pages 615-633, November.
  12. Volker Nocke, 2003. "A Gap for Me: Entrepreneurs and Entry," PIER Working Paper Archive 05-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 29 Sep 2005.
  13. Pierre-Philippe Combes & Gilles Duranton & Laurent Gobillon & Sébastien Roux, 2008. "Estimating Agglomeration Economies with History, Geology and Worker Effects," Working Papers 2008-22, Centre de Recherche en Economie et Statistique.
  14. Federico Cingano & Fabiano Schivardi, 2003. "Identifying the Sources of Local Productivity Growth," Temi di discussione (Economic working papers) 474, Bank of Italy, Economic Research and International Relations Area.
  15. Marc J. Melitz & Gianmarco I.P. Ottaviano, 2005. "Market Size, Trade, and Productivity," Development Working Papers 201, Centro Studi Luca d\'Agliano, University of Milano.
  16. Moomaw, Ronald L., 1983. "Is population scale a worthless surrogate for business agglomeration economies?," Regional Science and Urban Economics, Elsevier, vol. 13(4), pages 525-545, November.
  17. Antonio Di Cesare & Giovanni Guazzarotti, 2010. "An analysis of the determinants of credit default swap spread changes before and during the subprime financial turmoil," Temi di discussione (Economic working papers) 749, Bank of Italy, Economic Research and International Relations Area.
  18. Luigi Guiso & Paola Sapienza & Luigi Zingales, 2000. "The Role of Social Capital in Financial Development," NBER Working Papers 7563, National Bureau of Economic Research, Inc.
  19. Alesina, Alberto F & Algan, Yann & Cahuc, Pierre & Giuliano, Paola, 2010. "Family Values and the Regulation of Labor," CEPR Discussion Papers 7688, C.E.P.R. Discussion Papers.
  20. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
  21. Luigi Guiso & Fabiano Schivardi, 2007. "Spillovers in Industrial Districts," Economic Journal, Royal Economic Society, vol. 117(516), pages 68-93, 01.
  22. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
  23. Richard E. Baldwin & Toshihiro Okubo, 2006. "Heterogeneous firms, agglomeration and economic geography: spatial selection and sorting," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 323-346, June.
  24. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
  25. Stuart S. Rosenthal & William C. Strange, 2003. "Geography, Industrial Organization, and Agglomeration," Center for Policy Research Working Papers 56, Center for Policy Research, Maxwell School, Syracuse University.
  26. Wheeler, Christopher H, 2001. "Search, Sorting, and Urban Agglomeration," Journal of Labor Economics, University of Chicago Press, vol. 19(4), pages 879-99, October.
  27. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  28. Edward L. Glaeser, 2007. "Entrepreneurship and the City," NBER Working Papers 13551, National Bureau of Economic Research, Inc.
  29. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
  30. Kristian Behrens & Frédéric Robert-Nicoud, 2008. "Survival of the fittest in cities: agglomeration, selection, and polarisation," LSE Research Online Documents on Economics 28506, London School of Economics and Political Science, LSE Library.
  31. Markus Poschke, 2012. "Who Becomes an Entrepreneur? Labor Market Prospects and Occupational Choice," Cahiers de recherche 13-2012, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
  32. David G. Blanchflower, 2000. "Self-Employment in OECD Countries," NBER Working Papers 7486, National Bureau of Economic Research, Inc.
  33. Jacob Mincer, 1958. "Investment in Human Capital and Personal Income Distribution," Journal of Political Economy, University of Chicago Press, vol. 66, pages 281.
  34. Henderson I. Vernon, 1994. "Where Does an Industry Locate?," Journal of Urban Economics, Elsevier, vol. 35(1), pages 83-104, January.
  35. David Card, 2000. "Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems," NBER Working Papers 7769, National Bureau of Economic Research, Inc.
  36. Calvo, Guillermo A & Wellisz, Stanislaw, 1980. "Technology, Entrepreneurs, and Firm Size," The Quarterly Journal of Economics, MIT Press, vol. 95(4), pages 663-77, December.
  37. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, vol. 15(5), pages 1040-1061, October.
  38. LaFountain, Courtney, 2005. "Where do firms locate? Testing competing models of agglomeration," Journal of Urban Economics, Elsevier, vol. 58(2), pages 338-366, September.
  39. Guido de Blasio & Sabrina Di Addario, 2005. "Do Workers Benefit from Industrial Agglomeration?," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 797-827.
  40. Kim, Sunwoong, 1990. "Labor heterogeneity, wage bargaining, and agglomeration economies," Journal of Urban Economics, Elsevier, vol. 28(2), pages 160-177, September.
  41. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171 Elsevier.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bdi:wptemi:td_775_10. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.