High-Technology Entrepreneurship in Silicon Valley Opportunities and Opportunity Costs
The economic expansion of the late 1990s undoubtedly created many opportunities for business creation in Silicon Valley, but the opportunity cost of starting a business was also high during this period because of the exceptionally tight labor market. A new measure of entrepreneurship derived from matching monthly files from the Current Population Survey (CPS) is used to provide the first test of the hypothesis that entrepreneurship rates were high in Silicon Valley during the "Roaring 90s." Unlike previous measures of firm births based on large, nationally representative datasets, the new measure captures business creation at the individual-owner level, includes both employer and non-employer business starts, and focuses on only hi-tech industries. Estimates from the matched CPS data indicate that hi-tech entrepreneurship rates were lower in Silicon Valley than the rest of the United States during the period from January 1996 to February 2000. Controlling for the large concentration of immigrants and highly-educated workforce does not change the conclusion. Examining the post-boom period, we find that entrepreneurship rates in Silicon Valley increased from the late 1990s to the early 2000s. In contrast, trends in entrepreneurship rates in the United States were constant over this period. Although Silicon Valley may be an entrepreneurial location overall, the extremely tight labor market of the late 1990s, especially in hi-tech industries, may have suppressed business creation during this period.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Javier Miranda & Alfred Nucci & Steven J. Davis & John Haltiwanger & Ron S. Jarmin & C.J. Krizan & Kristin Sandusky, 2006.
"Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes,"
06-04, Center for Economic Studies, U.S. Census Bureau.
- Steven J. Davis & John Haltiwanger & Ronald S. Jarmin & C.J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2009. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Chapters, in: Producer Dynamics: New Evidence from Micro Data, pages 329-366 National Bureau of Economic Research, Inc.
- Steven J. Davis & John Haltiwanger & Ron S. Jarmin & C. J. Krizan & Javier Miranda & Alfred Nucci & Kristin Sandusky, 2007. "Measuring the Dynamics of Young and Small Businesses: Integrating the Employer and Nonemployer Universes," NBER Working Papers 13226, National Bureau of Economic Research, Inc.
- Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
- Paul Krugman, 1990.
"Increasing Returns and Economic Geography,"
NBER Working Papers
3275, National Bureau of Economic Research, Inc.
- Parker,Simon C., 2006.
"The Economics of Self-Employment and Entrepreneurship,"
Cambridge University Press, number 9780521030632, November.
- Parker,Simon C., 2004. "The Economics of Self-Employment and Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521828130, November.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Johansson, Edvard, 2000. " Self-Employment and Liquidity Constraints: Evidence from Finland," Scandinavian Journal of Economics, Wiley Blackwell, vol. 102(1), pages 123-34, March.
- Stuart, Toby & Sorenson, Olav, 2003. "The geography of opportunity: spatial heterogeneity in founding rates and the performance of biotechnology firms," Research Policy, Elsevier, vol. 32(2), pages 229-253, February.
- Scott Shane & Daniel Cable, 2002. "Network Ties, Reputation, and the Financing of New Ventures," Management Science, INFORMS, vol. 48(3), pages 364-381, March.
- Paul Gompers & Josh Lerner & David Scharfstein, 2005. "Entrepreneurial Spawning: Public Corporations and the Genesis of New Ventures, 1986 to 1999," Journal of Finance, American Finance Association, vol. 60(2), pages 577-614, 04.
- Cassar, Gavin, 2006. "Entrepreneur opportunity costs and intended venture growth," Journal of Business Venturing, Elsevier, vol. 21(5), pages 610-632, September.
- Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x, March.
When requesting a correction, please mention this item's handle: RePEc:net:wpaper:0804. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nicholas Economides)
If references are entirely missing, you can add them using this form.