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Human Capital and New Firm Formation

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Abstract

This paper investigates the impact human capital has on new firm formation, traditionally expected to have a positive influence. Individuals are attracted to regions with a stimulating atmosphere and tend to stay within the same region. Since human capital is partly spatially bounded, the size of municipality accessibility to human capital is expected to have a larger impact than intra-regional and inter-regional interaction. The empirical analysis is based on data on new firm formation at the municipality level in Sweden and accessibility to human capital, defined as minimum three years at tertiary level. The new firm formation is both measured in absolute and in relative terms. In the analysis, the municipalities are divided into four groups; (i) all municipalities, (ii) central municipalities (ii) municipalities within the hinterland in large functional regions and (iii) municipalities within the hinterland in small functional regions. This is done to make the comparison easy. The results indicate that it is the local market, measured as the size of the municipality accessibility to human capital that has a positive impact on new firm formation. Income per capita has a positive impact and average firm size has a negative impact on new firm formation.

Suggested Citation

  • Karlsson, Charlie & Backman, Mikaela, 2008. "Human Capital and New Firm Formation," CISEG Working Papers Series 1, Jönköping International Business School, Centre for Innovation Systems, Entrepreneurship and Growth.
  • Handle: RePEc:hhs:hjiseg:0001
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    File URL: http://www.ihh.hj.se/ciseg/documents/CISEG-WP-No-1.pdf
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    Cited by:

    1. Mikaela Backman, 2014. "Returns to Education across the Urban-Rural Hierarchy," The Review of Regional Studies, Southern Regional Science Association, vol. 44(1), pages 33-59, Spring.
    2. Bjuggren, Per-Olof & Elmoznino Laufer, Michel, 2014. "Bank Financing of Start-ups – Findings from a survey," Ratio Working Papers 232, The Ratio Institute.
    3. Bjuggren, Per-Olof & Elmoznino Laufer, Michel, 2015. "Startups, Financing and Geography– Findings from a survey," Ratio Working Papers 255, The Ratio Institute.
    4. Backman, Mikaela & Kohlhase, Janet, 2013. "The Influence of Diversity on the Formation, Survival and Growth of New Firms," Working Paper Series in Economics and Institutions of Innovation 337, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    5. Backman, Mikaela & Karlsson, Charlie, 2013. "Who says life is over after 55? Entrepreneurship and an aging population," Working Paper Series in Economics and Institutions of Innovation 325, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    6. Hans Westlund & Johan P. Larsson & Amy Rader Olsson, 2014. "Start-ups and Local Entrepreneurial Social Capital in the Municipalities of Sweden," Regional Studies, Taylor & Francis Journals, vol. 48(6), pages 974-994, June.
    7. Backman, Mikaela, 2013. "Banks and New Firm Formation," Working Paper Series in Economics and Institutions of Innovation 301, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    8. Mikaela Backman, 2013. "Who says life is over after 55? - New firm formation and an ageing population," ERSA conference papers ersa13p58, European Regional Science Association.
    9. Mats Johansson & Pia Nilsson & Hans Weslund, 2014. "Demographic and economic trends in a rural Europe in transition," ERSA conference papers ersa14p445, European Regional Science Association.

    More about this item

    Keywords

    human capital; new firm formation; municipalities; accessibility; Sweden;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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