nep-ent New Economics Papers
on Entrepreneurship
Issue of 2005‒09‒02
four papers chosen by
Marcus Dejardin
Facultés Universitaires Notre-Dame de la Paix

  1. WHY SO MANY LOCAL ENTREPRENEURS? By Claudio Michelacci; Olmo Silva
  2. Perfectly Competitive Innovation By Michele Boldrin; David K Levine
  3. Between-Firm Redistribution of Profit in Competitive Industries: Why Labor Market Policies May Not Work By Galina Vereshchagina
  4. Divide and Conquer? Decentralisation, Co-ordination and Cluster Survival By Kirsten Wolter

  1. By: Claudio Michelacci; Olmo Silva (CEMFI, Centro de Estudios Monetarios y Financieros)
    Abstract: We document that the fraction of entrepreneurs who work in the region where they were born is significantly higher than the corresponding fraction for dependent workers. This difference is more pronounced in more developed regions and positively related to the degree of local financial development. Frims created by locals are more valuable and bigger (in terms of capital and employment), operate with more capital intensive technologies, and are able to obtain greater financing per unit of capital invested, than firms created by non-locals. This evidence suggests that there are so many local entrepreneurs because locals can better exploit the financial opportunities available in the region where they were born. This can help explaining how local financial development cause presistent disparities in entrepreneurial activity, technology, and income.
    Keywords: Entreprenurship, economic and financial development, social capital.
    JEL: J23 O12 O16 Z13
    Date: 2005–05
  2. By: Michele Boldrin; David K Levine
    Date: 2005–08–28
  3. By: Galina Vereshchagina
    Abstract: Empirical studies document differences in firms' response to the introduction of various labor market policies. In particular, large and mature firms tend to participate more actively in targeted employment subsidy programs (under which firms receive subsidies for hiring disadvantaged workers). This paper offers an explanation for this phenomenon and argues that it might have important consequences for policy making. Namely, such behavior of firms may indicate that large and mature firms benefit from the introduction of a new subsidy program, while small and young firms incur indirect costs. In this case, the policy implicitly redistributes profit from young to mature firms and may discourage startups if the entry into the industry is competitive. The resulting decrease in the number of operating firms is likely to have a significant impact on the policy's outcomes. These effects become more pronounced as heterogeneity between young and mature firms increases.
    Date: 2005–06
  4. By: Kirsten Wolter
    Abstract: This paper develops a simulation model of the behaviour of clusters in the face of bifurcation events in their environment. Bifurcations are understood as the regional equivalent to Schumpeterian creative destruction. The model investigates the role of decentralisation and co-ordination for the likelihood of successful adaptation by comparing adaptive performance of clusters exhibiting different degrees of decentralisation and alternative modes of co-ordination. Using Kauffman’s (1993) N/K model, it is found that there is an optimum degree of decentralisation with respect to cluster adaptability while different co-ordination mechanisms face a trade-off between speed and cluster-level optimality of results. In doing so, the model sheds light on an empirical controversy regarding the role of both factors for adaptation that has emerged between the Silicon Valley – Boston 128 comparison on the one and the Italian Industrial District experience on the other hand. Moreover, the identification of the roles played by decentralisation and co-ordination for cluster adaptability in changing environments could serve as guidance for future empirical research as well as policy initiatives.
    Keywords: Cluster; Bifurcations; N/K model
    JEL: R11 R12
    Date: 2005

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