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The Contribution of New Businesses to Regional Employment - An Empirical Analysis of the Direct Employment Effect

Author

Listed:
  • Michael Fritsch

    () (Friedrich Schiller University Jena, School of Economics and Business Administration)

  • Yvonne Schindele

    () (Friedrich Schiller University Jena, School of Economics and Business Administration)

Abstract

We investigate regional differences in the contribution of newly founded businesses to regional employment. This is labeled the direct employment effect of new businesses. The analysis is at the spatial level of West German planning regions for the period 1984-2002. We find rather pronounced differences for the direct employment effect across regions. Regression analyses for explaining these differences show that the start-up rate, the education level of the regional workforce, and an entrepreneurial character of the regional technological regime have a positive impact on the direct employment effect of new businesses. The overall effect of population density is negative, but the marginal effect is positive for regions beyond a certain threshold. Our results suggest that the success of the new businesses is not at the expense of the incumbents but that direct and indirect employment effects of new businesses are positively interlinked.

Suggested Citation

  • Michael Fritsch & Yvonne Schindele, 2008. "The Contribution of New Businesses to Regional Employment - An Empirical Analysis of the Direct Employment Effect," Jena Economic Research Papers 2008-077, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2008-077
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    File URL: http://zs.thulb.uni-jena.de/receive/jportal_jparticle_00137250
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    Cited by:

    1. Andreas Koch & Jochen Spaeth, 2009. "New Firms---Different Jobs? An Inquiry into the Quality of Employment in Start-ups and Incumbents," IAW Discussion Papers 50, Institut für Angewandte Wirtschaftsforschung (IAW).

    More about this item

    Keywords

    Entrepreneurship; new business formation; regional development; direct employment effect;

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • 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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