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Firm Entry and Exit in Local Markets: Market Pull and Unemployment Push

  • Marcus Dejardin

    ()

    (CERPE, University of Namur-FUNDP)

  • Martin Carree

    ()

    (Maastricht University)

Firm entry and exit flows in the retailing and consumer services may be viewed as market equilibrating processes. Local markets with considerable market room and high unemployment ought to be characterized by high subsequent entry rates and low exit rates. However, lack of entrepreneurial alertness may inhibit this. We examine the relationship and obtain empirical results for a range of selected industries in 563 Belgian municipalities. We show that, over a three-year period, (net) entry is positively affected by the presence of local 'market room' and also by future market pull. We find 'unemployment push' effect on entry in easy-to-enter industries, but also a significant effect of unemployment on exit.

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File URL: http://www.fundp.ac.be/eco/economie/recherche/wpseries/wp/1114.pdf
File Function: First version, 2011
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Paper provided by University of Namur, Department of Economics in its series Working Papers with number 1114.

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Length: 20 pages
Date of creation: Oct 2011
Date of revision:
Handle: RePEc:nam:wpaper:1114
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Web page: http://www.fundp.ac.be/en/eco

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  1. Hattwick, Richard E., 1979. "Perception, opportunity and profit : Studies in the Theory of Entrepreneurship. By Israel M. Kirzner. Chicago: The University of Chicago Press, 1980. Pp. 239. Price: $15.00," Journal of Behavioral Economics, Elsevier, vol. 8(2), pages 183-188.
  2. Daniel Serra & Charles Revelle & Ken Rosing, 1999. "Surviving in a competitive spatial market: The threshold capture model," Economics Working Papers 359, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Adriaan Van Stel & David Storey, 2004. "The Link between Firm Births and Job Creation: Is there a Upas Tree Effect?," Regional Studies, Taylor & Francis Journals, vol. 38(8), pages 893-909.
  4. Schultz, Theodore W, 1980. " Investment in Entrepreneurial Ability," Scandinavian Journal of Economics, Wiley Blackwell, vol. 82(4), pages 437-48.
  5. Marcus Dejardin, 2006. "L'entrepreneuriat, le territoire et les conditions de leurs dynamiques cumulatives," Post-Print halshs-00089329, HAL.
  6. Schultz, Theodore W, 1975. "The Value of the Ability to Deal with Disequilibria," Journal of Economic Literature, American Economic Association, vol. 13(3), pages 827-46, September.
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