nep-ent New Economics Papers
on Entrepreneurship
Issue of 2013‒05‒22
four papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. INNOVATION, REALLOCATION AND GROWTH By Daron Acemoglu; Ufuk Akcigit; Nicholas Bloom; William Kerr
  2. The Regional Distribution and Correlates of an Entrepreneurship-Prone Personality Profile in the United States, Germany, and the United Kingdom: A Socioecological Perspective By Martin Obschonka; Eva Schmitt-Rodermund; Rainer K. Silbereisen; Samuel D. Gosling; Jeff Potter
  3. Survival, Productivity and Growth of New Ventures across Locations By Lööf, Hans; Nabavi, Pardis
  4. Financial Frictions, Occupational Choice, and Economic Inequality By Andres Erosa; Lian Allub

  1. By: Daron Acemoglu; Ufuk Akcigit; Nicholas Bloom; William Kerr
    Abstract: We build a model of firm-level innovation, productivity growth and reallocation featuring endogenous entry and exit. A key feature is the selection between high- and low-type firms, which differ in terms of their innovative capacity. We estimate the parameters of the model using detailed US Census micro data on firm-level output, R&D and patenting. The model provides a good fit to the dynamics of firm entry and exit, output and R&D, and its implied elasticities are in the ballpark of a range of micro estimates. We find industrial policy subsidizing either the R&D or the continued operation of incumbents reduces growth and welfare. For example, a subsidy to incumbent R&D equivalent to 53 of GDP reduces welfare by about 1.53 because it deters entry of new high-type firms. On the contrary, substantial improvements (of the order of 53 improvement in welfare) are possible if the continued operation of incumbents is taxed while at the same time R&D by incumbents and new entrants is subsidized. This is because of a strong selection effect: R&D resources (skilled labor) are inefficiently used by low-type incumbent firms. Subsidies to incumbents encourage the survival and expansion of these firms at the expense of potential high-type entrants. We show that optimal policy encourages the exit of low-type firms and supports R&D by high-type incumbents and entry.
    Keywords: entry, growth, industrial policy, innovation, R&D, reallocation, selection.
    JEL: E2
    Date: 2013–04
  2. By: Martin Obschonka; Eva Schmitt-Rodermund; Rainer K. Silbereisen; Samuel D. Gosling; Jeff Potter
    Abstract: In recent years the topic entrepreneurship has become a major focus in the social sciences, with renewed interest in the links between personality and entrepreneurship. Taking a socioecological perspective to psychology, which emphasizes the role of social habitats and their interactions with mind and behavior, we investigated regional variation in and correlates of an entrepreneurship-prone Big Five profile. Specifically, we analyzed personality data collected from over half a million U.S. residents (N = 619,397) as well as public archival data on state-level entrepreneurial activity (i.e., business-creation and self-employment rates). Results revealed that an entrepreneurship-prone personality profile is regionally clustered. This geographical distribution corresponds to the pattern that can be observed when mapping entrepreneurial activity across the U.S.. Indeed, the state-level correlation (N = 51) between an entrepreneurial personality structure and entrepreneurial activity was positive in direction, substantial in magnitude, and robust even when controlling for regional economic prosperity. These correlations persisted at the level of U.S. Metropolitan Statistical Areas (N = 15) and were replicated in independent German (N = 19,842; 14 regions) and British samples (N = 15,617; 12 regions). In contrast to these profile-based analyses, an analysis linking the individual Big Five dimensions to regional measures of entrepreneurial activity did not yield consistent findings. Discussion focuses on the implications of these findings for interdisciplinary theory development and practical applications.
    Date: 2013
  3. By: Lööf, Hans (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology); Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: We assess the impact of the location of genuinely new ventures and spinoffs on these firms’ survival, productivity and growth. The study distinguishes between four different categories of locations: metro cities, metro regions, urban areas, and rural areas. Using a unique database covering more than 23,000 new entrants between 2000 and 2004 in Sweden and observing them for 5 years, several conclusions may be drawn from our study. First, there is a substantial difference in ex-post entry performance between the manufacturing and service sectors. Second, the proposed superiority of start-ups by ex-employees depends on the performance measures and the sector. Third, knowledge and technology intensity of the industry matter for the viability of the new firms.
    Keywords: Location; New ventures; Survival; Productivity; Growth
    JEL: L25 L26 M13 O47 R11
    Date: 2013–05–08
  4. By: Andres Erosa (IMDEA); Lian Allub (Universidad Carlos III de Madrid)
    Abstract: We develop a quantitative life-cycle theory of occupational choice decisions, economic inequality, and financial frictions. The model is calibrated to life-cycle evidence on occupational choices and their persistence, earnings inequality, and consumption inequality in the Brazilian data. An important novelty of our theory is that individuals are heterogeneous in two ability types - ability as a worker and ability as an entrepreneur. Depending on their comparative advantage at occupations (ratio of abilities) and wealth, individuals may choose to become workers or entrepreneurs. The correlation of these two abilities is important for the quantitative implications of the theory because it determines the extent to which talented entrepreneurs are able to self-finance their businesses. When the correlation between skills is high, individuals that are talented as entrepreneurs are also talented as workers. Then, if skills are also persistent over time, young and talented individuals can work when young, build savings, and use their savings to finance their businesses when old. Thus, when entrepreneurial and working skills are highly correlated and persistent over time, the effects of financial frictions on resource allocations are less important than otherwise. Through counterfactual exercises, we want to study how alternative ways of generating economic inequality matter for the effects of financial frictions in the economy. We expect these results to deepen our understanding of the (non-trivial) interactions between inequality, financial frictions, and economic development.
    Date: 2012

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