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Entrepreneurship and Market Size. The Case of Young College Graduates in Italy

Author

Listed:
  • Sabrina Di Addario

    (Bank of Italy)

  • Daniela Vuri

    (University of Rome Tor Vergata)

Abstract

We analyze empirically the effects of urban agglomeration on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individual’s province of work reduces the chances of being an entrepreneur by0.2 per cent. This result is robust to controlling for regional fix effects and to instrumenting urbanization with three different sets of instruments. However, a positive urbanization externality emerges after taking into account urban amenities and dis-amenities, and, above all, provinces’ competition and cost of labor. In this case, every 100,000 inhabitant-increase raises the chance of entrepreneurship by 2.4 percent. Finally, as long as they succeed in entering the largest markets, young entrepreneurs are able to reap off the benefits of urbanization externalities: every 100,000 inhabitant-increase in the province’s population raises entrepreneurs’ net hourly income by 0.2 percent.

Suggested Citation

  • Sabrina Di Addario & Daniela Vuri, 2009. "Entrepreneurship and Market Size. The Case of Young College Graduates in Italy," Development Working Papers 280, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:280
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    File URL: https://www.dagliano.unimi.it/media/WP2009_280.pdf
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    2. Yang, Xiaolan & Hong, Xiaoyue & Li, Wenchao, 2023. "“Only children” and entrepreneurship in China: Spillover effects and mechanisms," Pacific-Basin Finance Journal, Elsevier, vol. 79(C).
    3. Lan, Xiujuan & Hu, Zheneng & Wen, Chuanhao, 2023. "Does the opening of high-speed rail enhance urban entrepreneurial activity? Evidence from China," Socio-Economic Planning Sciences, Elsevier, vol. 88(C).
    4. Joanna Tyrowicz & Magdalena Smyk & Barbara Liberda, 2017. "Talent workers as entrepreneurs: a new approach to aspirational self-employment," Bank i Kredyt, Narodowy Bank Polski, vol. 48(6), pages 571-592.
    5. Pokrovsky Dmitry & Behrens Kristian & Zhelobodko Evgeny, 2014. "Market Size, Entrepreneurship, and Income Inequality," EERC Working Paper Series 14/01e, EERC Research Network, Russia and CIS.
    6. Hugo Horta & Michele Meoli & Silvio Vismara, 2016. "Skilled unemployment and the creation of academic spin-offs: a recession-push hypothesis," The Journal of Technology Transfer, Springer, vol. 41(4), pages 798-817, August.
    7. Grover, Arti & Lall, Somik & Timmis, Jonathan, 2023. "Agglomeration economies in developing countries: A meta-analysis," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    8. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    9. Behrens, Kristian & Robert-Nicoud, Frédéric, 2015. "Agglomeration Theory with Heterogeneous Agents," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 171-245, Elsevier.
    10. Andrea Bonaccorsi & Massimo Colombo & Massimiliano Guerini & Cristina Rossi-Lamastra, 2014. "The impact of local and external university knowledge on the creation of knowledge-intensive firms: evidence from the Italian case," Small Business Economics, Springer, vol. 43(2), pages 261-287, August.
    11. Wan Li & Bindong Sun & Shuaishuai Han & Xiaoxi Jin, 2023. "Does Urban Agglomeration Discourage Entrepreneurship in China? Micro-Empirical Evidence from China," Land, MDPI, vol. 12(1), pages 1-14, January.
    12. repec:spo:wpmain:info:hdl:2441/1kv8mtgl748r0ahh12air9erdc is not listed on IDEAS
    13. Nam Kyoon N. Kim & Simon C. Parker, 0. "Entrepreneurial homeworkers," Small Business Economics, Springer, vol. 0, pages 1-25.
    14. Elsayyad, May & Konrad, Kai A., 2012. "Fighting multiple tax havens," Journal of International Economics, Elsevier, vol. 86(2), pages 295-305.
    15. Hu, Haoyu & Wang, Wei & Xin, Ge & Ye, Fangjin, 2024. "Impact of city size on self-employment behavior: Evidence from Chinese migrants," Journal of Asian Economics, Elsevier, vol. 95(C).
    16. Nam Kyoon N. Kim & Simon C. Parker, 2021. "Entrepreneurial homeworkers," Small Business Economics, Springer, vol. 57(3), pages 1427-1451, October.
    17. Di Addario, Sabrina, 2011. "Job search in thick markets," Journal of Urban Economics, Elsevier, vol. 69(3), pages 303-318, May.
    18. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    19. My-Linh Tran & Shihmin Lo, 2024. "Unlocking the Power of Entrepreneurship Activity in Vietnam’s Regions: The Role of Formal Institution," SAGE Open, , vol. 14(1), pages 21582440241, February.
    20. Colombo, Massimo G. & Piva, Evila, 2020. "Start-ups launched by recent STEM university graduates: The impact of university education on entrepreneurial entry," Research Policy, Elsevier, vol. 49(6).

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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure

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