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Investigating the Anatomy of the Employment Effects of New Business Formation

Author

Listed:
  • Michael Fritsch

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

  • Florian Noseleit

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

Abstract

Recent empirical research has found that the effect of new business formation on employment emerges over a period of about ten years and has identified a 'wave' pattern of these effects. In this study, we decompose the overall contribution of new business formation on employment change into direct and indirect effects. The results indicate that indirect effects of new business formation are quantitatively much more important than the direct effects. Furthermore, we find that regional differences of the employment change generated by new business formation can to a large part be explained by respective differences of the indirect effects. Hence, the interaction of the start-ups with their regional environment plays a great role for explaining their impact on regional development.

Suggested Citation

  • Michael Fritsch & Florian Noseleit, 2009. "Investigating the Anatomy of the Employment Effects of New Business Formation," Jena Economic Research Papers 2009-001, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2009-001
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    Citations

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    Cited by:

    1. Daniel Fackler & Michaela Fuchs & Lisa Hölscher & Claus Schnabel, 2019. "Do Start-ups Provide Employment Opportunities for Disadvantaged Workers?," ILR Review, Cornell University, ILR School, vol. 72(5), pages 1123-1148, October.
    2. Neil Lee & Andrés Rodríguez-Pose, 2021. "Entrepreneurship and the fight against poverty in US cities," Environment and Planning A, , vol. 53(1), pages 31-52, February.
    3. David Audretsch & Maksim Belitski & Sameeksha Desai, 2015. "Entrepreneurship and economic development in cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 55(1), pages 33-60, October.
    4. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Ratio Working Papers 150, The Ratio Institute.
    5. Jiaochen Liang & Stephan Goetz, 2016. "Self-employment and trade shock mitigation," Small Business Economics, Springer, vol. 46(1), pages 45-56, January.
    6. holmes, james, 2019. "Why do firms incorporate and what difference does it make?," MPRA Paper 93313, University Library of Munich, Germany.
    7. Brixy, Udo & Murmann, Martin, 2016. "The growth and human capital structure of new firms over the business cycle," IAB Discussion Paper 201642, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    8. Michael Fritsch & Florian Noseleit, 2009. "Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth," Jena Economic Research Papers 2009-081, Friedrich-Schiller-University Jena.
    9. Schneck, Stefan & May-Strobl, Eva, 2013. "Wohlstandseffekte des Gründungsgeschehens," IfM-Materialien 223, Institut für Mittelstandsforschung (IfM) Bonn.
    10. Mendonça, Joana & Heitor, Manuel, 2016. "The changing patterns of industrial production: How does it play for the Iberian Peninsula?," Technological Forecasting and Social Change, Elsevier, vol. 113(PB), pages 293-307.
    11. Michael Fritsch & Alexandra Schroeter, 2011. "Does Quality Make a Difference? Employment Effects of High- and Low-Quality Start-Ups," Jena Economic Research Papers 2011-001, Friedrich-Schiller-University Jena.
    12. Natalia Salazar Ferro & Carlos Antonio Mesa & Natalia Navarrete, 2017. "La estructura de las tarifas de registro en las Cámaras de Comercio y beneficios de sus servicios: impacto sobre la competitividad y la formalidad empresarial," Informes de Investigación 015726, Fedesarrollo.
    13. Martin Andersson & Florian Noseleit, 2011. "Start-ups and employment dynamics within and across sectors," Small Business Economics, Springer, vol. 36(4), pages 461-483, May.
    14. Javier Changoluisa & Michael Fritsch, 2020. "New Business Formation and Incumbents’ Perception of Competitive Pressure," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 56(1), pages 165-197, February.
    15. Michael Fritsch & Florian Noseleit, 2013. "Indirect employment effects of new business formation across regions: The role of local market conditions," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 361-382, June.
    16. K. Bruns & N. Bosma & M. Sanders & M. Schramm, 2017. "Searching for the existence of entrepreneurial ecosystems: a regional cross-section growth regression approach," Small Business Economics, Springer, vol. 49(1), pages 31-54, June.
    17. Yancy Vaillant & Esteban Lafuente & Manoj Chandra Bayon, 2019. "Early internationalization patterns and export market persistence: a pseudo-panel data analysis," Small Business Economics, Springer, vol. 53(3), pages 669-686, October.
    18. Fossen, Frank M., 2019. "Entrepreneurship over the Business Cycle in the United States: A Decomposition," IZA Discussion Papers 12499, Institute of Labor Economics (IZA).
    19. Jiaochen Liang & Stephan J. Goetz, 2016. "Self-employment and trade shock mitigation," Small Business Economics, Springer, vol. 46(1), pages 45-56, January.
    20. Stefan Fölster & Li Jansson & Anton Nyrenström Gidehag, 2016. "The effect of local business climate on employment," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing, vol. 5(1), pages 2-24, April.
    21. Bach Nguyen & Nguyen Phuc Canh & Su Dinh Thanh, 0. "Institutions, Human Capital and Entrepreneurship Density," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 0, pages 1-24.
    22. Schneck, Stefan & May-Strobl, Eva, 2014. "The economic contribution of start-up firms in Germany," Working Papers 02/14, Institut für Mittelstandsforschung (IfM) Bonn.
    23. Dustin Chambers & Jonathan Munemo, 2019. "Regulations, institutional quality and entrepreneurship," Journal of Regulatory Economics, Springer, vol. 55(1), pages 46-66, February.
    24. Rui Baptista & Miguel Preto, 2011. "New firm formation and employment growth: regional and business dynamics," Small Business Economics, Springer, vol. 36(4), pages 419-442, May.
    25. Miguel Ramirez de la Huerga & Víctor A. Bañuls Silvera & Murray Turoff & Manuel Rincón Roldan, 2019. "Evaluation Tool for Business Success," Working Papers 19.01, Universidad Pablo de Olavide, Department of Business Organization and Marketing (former Department of Business Administration).

    More about this item

    Keywords

    Entrepreneurship; new business formation; regional development; direct and indirect effects;
    All these keywords.

    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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