nep-ent New Economics Papers
on Entrepreneurship
Issue of 2008‒03‒15
five papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Bargaining Over New Ideas: Rent Distribution and Stability of Innovative Firms By Ronny Razin; Mariagiovanna Baccara
  2. Start-Up Subsidies in East Germany: Finally, a Policy that Works? By Caliendo, Marco
  3. Borrowing Constraints, Entrepreneurial Risks, and the Wealth Distribution in a Heterogeneous Agent Model By Christiane Clemens; Maik Heinemann
  4. Segregation, Entrepreneurship and Work Values: The Case of France By Senik, Claudia; Verdier, Thierry
  5. Employment Stability of Entrants in Newly Founded Firms: A Matching Approach Using Linked Employer-Employee Data from Germany By Schnabel, Claus; Kohaut, Susanne; Brixy, Udo

  1. By: Ronny Razin; Mariagiovanna Baccara
    Date: 2008
  2. By: Caliendo, Marco (IZA)
    Abstract: The German government has spent between 7bn and 11bn Euro per year on active labor market policies (ALMP) in East Germany in the last decade. The effectiveness of the most important programs (in terms of participants and spending) such as job-creation schemes and vocational training has been evaluated quite thoroughly in recent years. The results are disappointing, indicating that nearly all of these ‘traditional’ programs have to be rated as a failure. In light of these findings, policies to encourage unemployed people to become self-employed gained increasing importance. We present first evidence on the effectiveness of two start-up programs in East Germany. Our findings – even though partly preliminary – are rather promising, showing that these programs increase employment chances and earnings of participants. Hence, start-up subsidies might work even in a labor market with structural problems such as the one in East Germany.
    Keywords: start-up subsidies, evaluation, effectiveness, East Germany, self-employment
    JEL: I21 Z13 J24
    Date: 2008–02
  3. By: Christiane Clemens (Faculty of Economics and Management, Otto-von-Guericke University Magdeburg); Maik Heinemann (University of Lüneburg)
    Abstract: This paper deals with credit market imperfections and idiosyncratic risks in a two–sector heterogeneous agent dynamic general equilibrium model of occupational choice. We focus especially on the effects of tightening financial constraints on macroeconomic performance, entrepreneurial risk–taking, and social mobility. Contrary to many models in the literature, our comparative static results cover the entire range of borrowing constraints, from complete markets to a perfectly constrained economy. In our baseline model, we find substantial gains in output, welfare, and wealth equality associated with relaxing the constraints, but argue that it might also prove worthwhile to examine the marginal gains from credit market improvements. Interestingly, the amount of entrepreneurial activity and social mobility increases if borrowing constraints become more tight. These results can be attributed to the general equilibrium nature of our approach, where optimal firm sizes and the demand for credit are determined endogenously. The comparative static results on the entrepreneurship rate and social mobility respond sensitively to a change in income persistence.
    Keywords: DSGE model, wealth distribution, occupational choice, borrowing constraints
    JEL: C68 D3 D8 D9 G0 J24
    Date: 2008–03
  4. By: Senik, Claudia (University of Paris IV Sorbonne, PSE); Verdier, Thierry (PSE)
    Abstract: This paper studies the interaction between labor market integration, the evolution of “work values” and entrepreneurial capital inside minority communities. A simple model of labor market segmentation with ethnic capital and endogenous transmission of cultural values inside the minority group is presented. It emphasizes the role of entrepreneurial capital as an important driver of labor market integration and as a promoter of meritocratic work values inside the community. The case of South European and North African second generation immigrants in France is then empirically studied as an example, contrasting strongly how the differential economic and cultural integration in the labor market correlates with the differential level of entrepreneurial capital of the two communities.
    Keywords: social capital, ethnic segmentation, work values, labor discrimination
    JEL: J15 J61 J7 Z13
    Date: 2008–01
  5. By: Schnabel, Claus (University of Erlangen-Nuremberg); Kohaut, Susanne (IAB, Nürnberg); Brixy, Udo (IAB, Nürnberg)
    Abstract: Using a linked employer-employee dataset and taking the perspective of individuals rather than firms, this paper analyzes some effects of joining start-ups. We show that entrants in new firms differ from those joining incumbent firms, and we use a matching approach to compare a group of employees joining new firms in 1995/96 with a control group entering incumbent firms. Our results indicate that individuals’ employment stability was higher in incumbent than in newly founded firms while their risk of becoming unemployed was lower. In particular in eastern Germany, joining firms that were older than six years was the best strategy.
    Keywords: linked employer-employee data, newly founded firms, unemployment, employment, Germany
    JEL: J63 J64
    Date: 2008–02

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