New firm formation and employment growth: regional and business dynamics
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This study examines differences in the effects of start-up rates on subsequent employment change. Two sources of such differences—types of start-ups and types of regions—are analyzed. We find that differences between knowledge-based and other start-ups dominate differences between highly agglomerated and modestly agglomerated regions. In particular, differences in the effects of new start-ups on subsequent employment growth between highly agglomerated and modestly agglomerated regions are greater for knowledge-based start-ups than for other types of start-ups. The results suggest that, while knowledge-based start-ups are likely to impart greater benefits on future employment than other types of start-ups, these benefits are greater when those start-ups locate in more agglomerated regions.
KeywordsEntrepreneurship Employment growth Knowledge based firms Regional agglomeration
JEL ClassificationsJ23 L26 M13 O52
The authors would like to thank Marcus Dejardin, Michael Fritsch, Pamela Mueller, Andre van Stel, and participants in the Special Session “Entrepreneurship and the Region” of 2007 ERSA Conference at ESSEC Business School (Paris). We are indebted to the Portuguese Ministry of Labor and Social Solidarity and to the Portuguese National Statistics Office (INE) for allowing us access to the data used in this paper. Miguel Torres Preto gratefully acknowledges the financial support of the Portuguese Foundation for Science and Technology (FCT grant SFRH/BD/22648/2005).
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