nep-sbm New Economics Papers
on Small Business Management
Issue of 2014‒12‒29
seventeen papers chosen by
João Carlos Correia Leitão
Universidade da Beira Interior

  1. Innovation and export in SMEs: the role of relationship banking. By Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
  2. Comparative analysis of the implementation of Triple Helix Theory in Greece and Hungary and lessons learned from both cases´ By Chrysanthi Balomenou; Aniko Kalman; Konstantinos Kolovos
  3. Agglomeration economies and global activities: impact on firm survival By Anna Maria Ferragina; Fernanda Mazzotta
  4. Benchmark Value Added Chains and Regional Clusters in German R&D Intensive Industries By Reinhold Kosfeld; Mirko Titze
  5. Location of research-based spin-offs: how relevant are regional effects? By Oscarina Conceição; Ana Paula Faria; Margarida Fontes
  6. Do Entrepreneurs Really Earn Less? By Sorgner, Alina; Fritsch, Michael; Kritikos, Alexander S.
  7. Regional Transitions from Socialism to Entrepreneurship: Russia and Germany compared By Michael Fritsch; Alina Sorgner; Michael Wyrwich; Evguenii Zazdravnykh
  8. Smart Specialisation in the EU: Is it a Bridge between Innovation and Cohesion? By Argentino Pessoa
  9. The entrepreneurial performance of the Central and Eastern European regions By Balázs Páger
  10. The Impact of Skilled Foreign Workers on Firms: an Investigation of Publicly Traded U.S. Firms By Anirban Ghosh; Anna Maria Mayda; Francesc Ortega
  11. Clusters and territorial industrial complexes: common and specific characteristics By Vladimir Malov
  12. Smart Specialisation and Innovation in Rural Areas By Artur da Rosa Pires; Martina Pertoldi; John Edwards; Fatime Barbara Hegyi
  13. Knowledge Spillovers in Cities: The Role of Imitation and Innovation By Dirk Assmann; Johannes Stiller
  14. Firm size distribution in Italy and employment protection By Luca Amendola
  15. The impact of change in MSEs? regulation in municipalities in Sao Paulo state, Brazil By Andre Chagas; Alexandre Almeida
  16. Recessions, recoveries and regional resilience: Evidence on Italy By Di Caro, Paolo
  17. The fine microstructure of knowledge creation dynamics: reporting further advances By Marcus Berliant; Masahisa Fujita

  1. By: Serena Frazzoni; Maria Luisa Mancusi; Zeno Rotondi; Maurizio Sobrero; Andrea Vezzulli
    Abstract: This paper assesses the role of relationship lending in explaining simultaneously the innovation activity of Small and Medium Enterprises (SME), their probability to export (i.e. the extensive margin) and their share of exports on total sales conditional on exporting (i.e. the intensive margin). We adopt a measure of informational tightness based on the ratio of firm’s debt with its main bank to firm’s total assets. Our results show that the strength of the bank-firm relation has a positive impact on both SME’s probability to export and their export margins. This positive effect is only marginally mediated by the SME’s increased propensity to introduce product innovation. We further discuss the financial and non-financial channels through which the intensity of bank-firm relationship supports SMEs’ international activities.
    Keywords: margins of export, bank-firm relationships, innovation, localized knowledge spillovers.
    JEL: F10 G20 G21 O30
    Date: 2014–10
  2. By: Chrysanthi Balomenou; Aniko Kalman; Konstantinos Kolovos
    Abstract: In the theoretical part of our paper focused on a) The role of the Knowledge / Universities as a leader of Technological change ? Knowledge transfer dynamics and its influence on Regional Development, b) the Entrepreneurship education: The role of the Entrepreneurial University, c) Knowledge Spillovers and regional Innovation System (RIS): empirical evidence of some European Regions, d) the current situation in Greek Higher Education, focusing on the New Educational Law and especially on the plan "Athena" of the Ministry of Education, for the restructure / reallocation of the Greek Universities and Technological Institutions e) The new Law for Research Technology and Innovation in Greece (Horizon 2020 program) c) The Hungarian case study. In the empirical part of our paper, we are studding the restructure / reallocation of the Greek Universities and Technological Institutions. Our research methodology, based on the data extracted from targeted questionnaires addressed both to Greek entrepreneurs and Greek universities ? Scientific Institutions, attempts to show on one hand how the Universities assess the business environment and their new role in the relevant new institutional framework and on the other hand how the Greek industries evaluate their cooperation with the universities sector and their new role in terms of supporting the local entrepreneurship, as well. The used method for analyzing the results is the one of SPSS (descriptive statistics, correlation ? convexity indicators). The main findings coming by the processing of the statistical data of our scientific research, reveal that in crisis period the universities can find a new source of funding by "advertising" their main mission, which is the diffusion of Knowledge, and especially, the innovative one that enterprises need, in order to succeed and to overcome the crisis bad effects. Thus, we can observe that the results of our empirical analysis are strongly related to the relevant literature presented in the theoretical part of our paper. Finally, considerable general conclusions, policy proposals and questions/ challenges for further research will be presented at the end of our study. Finally, we would like to draw your attention on the fact that during this period is taking palace an ongoing relevant research in Hungary and we are expecting the results in order to be able to make a comparative analysis and consequently the appropriate SWOT ANALYSIS.
    Keywords: Universities; Triple Helix Theory; Local Entrepreneurship; Endogenous regional growth; cross country cooperation ? collaboration in knowledge economy O30; 031; 0;32;O33; O38; R11; R58
    Date: 2014–11
  3. By: Anna Maria Ferragina; Fernanda Mazzotta
    Abstract: The focus of our contribution is to shed light on the importance of firm agglomerations and FDI as drivers of firm survival in Italy. We focus upon different types of agglomeration economies related to the geographical context checking how these economies impact differently on heterogeneous firms survival and whether effects are robust to different estimators (Probit, Cox hazard models, Probit Heckman) and to different assumptions about inter-and intra-regional spillovers. The novelty our paper with respect to previous studies is twofold. First of all, we focus both on external economies and on firm internationalization, two crucial determinants of firm productivity and competitiveness and ultimately of firm survival. Hence, we consider the intertwined role of firm global activities with respect to the local drivers of firm dynamics by comparing foreign investors in Italy and Italian firms' investing abroad to domestic firms to catch a crucial source of heterogeneity of firm behavior with respect to external economies (correcting for the endogeneity of the FDI variables and for sample selection). Secondly, we use a very large dataset at firm level which takes into account several different dimensions at firm, industry and province level (previous studies are mostly at sectoral or at province/regional level) for more than 500,000 observations concerning Italian manufacturing corporate firms disaggregated by sector and by 103 provinces over a long span of time (2002-2010) which allows to also catch the effect of the crisis. With respect to agglomeration economies the paper analyses whether and how firms' exit choices are influenced by five different agglomeration indicators related to the geographical context: 1) External economies arising from localization economies due to the spatial concentration of firms in the same industry (GLAESER et al., 1992) and to 2) local production systems (Industrial districts); 3) External economies available to all local firms irrespective of sector and arising from urban size and density (urbanization economies); 4) External economies available to all local firms stemming from specialisation of firms in different varieties which may favour intra- and inter industry knowledge spillovers via Jacobs externalities (JACOBS, 1969); 5) diversification due to unrelated variety to capture the portfolio effect arising from the spatial concentration of firms belonging to different and non-complementary industries which may protect the region from sector-specific shocks (FRENKEN et al., 2007). We check whether the relevance of these agglomeration economies differ substantially between Italian firms and firm which invest in active or passive FDI. We get evidence on three issues: 1) Benefits from geographically and industry bounded specialisation for survival; 2) Industrial districts economies impact on firm survival 3) Diversification economies relevance.
    JEL: C41 F21 F23 L25
    Date: 2014–11
  4. By: Reinhold Kosfeld; Mirko Titze
    Abstract: Strong regional clusters are increasingly seen as a response to economic globalization by policy makers and regional development agencies. The reasoning of competitive advantages of countries and regions with enterprises organized in clusters has mainly been popularized by Porter (1990, 1998, 2000). As well-working clusters are associated with high productivity growth and innovation potential, the cluster approach has become appealing in different fields of economic policy. In particular cluster-based instruments are in integral part of EU regional policy (Christensen et al., 2011). In most EU countries cluster-oriented policy plays an important role at the national and regional level (Oxford Research, 2008). This also holds for Germany where diverse national and regional programmes were set up to promote cluster development (Török, 2012). Although the cluster approach is based on the agglomeration theory, a variety of definitions of a cluster exists (Martin/Sunley, 2003). The present paper aims at improving the strategy of regional cluster identification. First, at the national level, the dominant related sectors of R&D intensive industries are basically discovered by qualitative input-output analysis (QIOA). Yet it has to be allowed for the fact that usually not all enterprises of these sectors belong to the respective value added chains. Thus, QIOA has to be supplemented by quantitative input-output analysis in order to avoid distortion effects that arise from defining too heterogeneous clusters. Here downstream and upstream sectors are considered according to their involvement in the production activities of the key industry. Secondly, at the local level, it has to be settled whether and how spatial externalities and spillovers should be allowed for in locating regional clusters. Most applied cluster studies ignore the presence of spatial interaction between interrelated geographical units. If geographical units are considered to be spatially independent in the presence of spillover, however, spatial clustering tends to be underestimated (Guillain/Le Gallo, 2007). Feser/Koo/Renski/Sweeney (2001) and Feser/Sweeney (2002) were the first to explicitly accounting for spatial interaction between regions in an applied cluster study for the US state of Kentucky. In a follow-up study, Feser/Sweeney/Renski (2005) extended spatial analysis to the United States as a whole. Both studies make use of the Getis-Ord statistic to measure and test for local spatial clustering (Ord/Getis, 1995). Recently, Pires et al. (2013) utilize the local Moran test for localizing industrial clusters in Brazil. A major drawbacks of both local methods is the necessity of fixing the environments of the regions in advance. reach of the geographical extent of potential spillover effects in advance. To allow for varying reaches of the geographical extent of regional interaction, here the flexible approach of spatial scanning is adopted (Kulldorff, 1997). On the basis of Kulldorff's scan test, the variable extent of potential regional clusters is accurately captured.
    Keywords: National cluster templates; regional clusters; Qualitative Input-Output Analysis (QIOA); spatial scanning
    JEL: R12 R15
    Date: 2014–11
  5. By: Oscarina Conceição (DINÂMIA-CET, University Institute of Lisbon, Lisbon, Portugal & Polytechnic Institute of Cavado and Ave); Ana Paula Faria (Universidade do Minho - NIPE); Margarida Fontes (LNEG – National Laboratory of Energy and Geology. Lisbon, Portugal & DINÂMIA-CET, University Institute of Lisbon, Lisbon, Portugal)
    Abstract: Using a unique self-collected dataset that comprehends the population of research-based spin-offs created in Portugal from 1995 until to 2007, we investigate the location choices of these firms. In order to do so we control for both university- and region-related mechanisms. Our results suggest that the latter play a lesser role than university-related mechanisms. Although the availability of qualified human capital and urbanization economies seem to exert some effect on the location choices of research-based spin-offs, our results suggest that the quality and prestige of the universities located in a region, as well as the presence of university-affiliated incubators and/or university research parks have a stronger impact on the intensity of RBSO location across regions.
    Keywords: academic spin-offs; firm creation; location decision; count data analysis
    Date: 2014
  6. By: Sorgner, Alina (University of Jena); Fritsch, Michael (University of Jena); Kritikos, Alexander S. (University of Potsdam, DIW Berlin)
    Abstract: Based on representative micro data for Germany, we compare the incomes of self-employed with those of wage workers. Our results show that the median self-employed entrepreneur with employees earns significantly more than the median salaried employee, while the median solo entrepreneur earns less. However, solo entrepreneurship pays for those with a university entrance degree but no further professional qualification as well as for those who were in the upper percentiles of the income distribution in their previous salaried job. Surprisingly, the variation in hourly incomes of solo entrepreneurs is higher than that of entrepreneurs with employees.
    Keywords: income, entrepreneurship, self-employment, start-ups, Germany
    JEL: L26 D22
    Date: 2014–11
  7. By: Michael Fritsch; Alina Sorgner; Michael Wyrwich; Evguenii Zazdravnykh
    Abstract: We investigate the personal- and regional-level determinants of entrepreneurial activities in East Germany and Russia in the process of transition to a market-type economy. In this comparison entrepreneurship in West Germany is used as a benchmark. Whereas East Germany has experienced?after 40 years of socialism?a shock-like-transformation towards a market economy, Russia was under socialistic regime for a period of about 70 years, and its economic development after the breakdown of the Soviet Union diverged from the development in East Germany. Hence, one can expect substantial differences in the level of entrepreneurship and determinants of the decision to be self-employed in these two countries and their regions. While a number of studies indicate that East Germany has now largely overcome its socialistic legacy with regard to entrepreneurial activities (Fritsch et al., 2013,2014),the developments in Russia are still largely unclear. There are some cross-country comparisons of the overall level of entrepreneurial activity that include Russia (Djankov,et al.,2005, 2006; Ageev,et al.,1995; Aidis,et al.,2008). There is, however,hardly evidence on the dynamics of entrepreneurship in detail and with comparison to other post-socialist countries. We conduct micro-data panel analyses for Germany and Russia that cover the time period from shortly after German reunification until recently. The analysis for Germany is based on the Socio-Economic Panel(SOEP), a national representative survey of German households containing detailed information about people's socio-economic and psychological characteristics. Data for Russia comes from the Russia Longitudinal Monitoring Survey(RLMS) which is comparable to Germany's SOEP. For detailed regional analysis in Russia, we additionally use the Overall Monitoring of Living Conditions(OMLC) data set. We find several differences with regard to entrepreneurial activities between East- and West Germany and Russia. While the level of entrepreneurship in East Germany has achieved the West German level of about 12 percent 15 years after the German reunification, the self-employment rate in Russia is still very low at about 4 percent. In all countries under inspection there is substantial variation of the level of self-employment across regions. With regard to the individual-level determinants of self-employment,we observe several differences between Germany and Russia. While age does not seem to play a significant role for the probability of being an entrepreneur in Russia,this relationship has a statistically significant reversed u-shape in Germany. Moreover, entrepreneurs in Germany are more likely to be low- and high-educated,in comparison to employees,whereas in Russia we observe a positive and linear relationship between formal education and the probability of entrepreneurship. Furthermore, Russian entrepreneurs tend to work in occupations that do not correspond with their field of education, thus, indicating necessity-driven nature of entrepreneurship in Russia. Nonetheless, Russian and German entrepreneurs are similar in that they are more likely to be married and men.
    Keywords: entrepreneurship; new business formation; transformation; regional development; East Germany; Russia
    JEL: L26 O11
    Date: 2014–11
  8. By: Argentino Pessoa
    Abstract: Current innovation policy is the result of decades of research about the nature and role of innovation in economic growth. Such investigation has contributed to redesign our knowledge not only on the role played by innovation in economic development but also about the relationship between innovation and territory. Although the huge literature examining the relationships between territory and innovation has shown abundant evidence that certain regions are systematically more innovative than others the reasons for this dissimilarity go on being controversial. But, whatever the reason, the propensity for generation or absorption of innovation differs clearly between regions with some regions being characterised more by innovation-using rather than innovation-producing activities and others by a complete absence of innovation. Resulting from the criticisms to former policy approaches and from theoretical and empirical developments, the concept of ?smart specialisation' appeared and has gained significant political prominence in the European Union (European Commission, 2010; McCann and Ortega-Argilés, 2011). Although regions in many parts of the world are showing interest in the smart specialisation policy approach (OECD, 2012), it is Europe that takes the lead in this type of strategy, feeding high expectations about the results of this approach. In fact, European Commission sees smart specialisation as ?the basis for European Structural and Investment Fund interventions in research and innovation considered as part of the future Regional Policy's contribution to the Europe 2020 jobs and growth agenda'. Furthermore, the EC goes beyond the innovation policy domain and describes smart specialisation as involving ?a process of developing a vision, identifying competitive advantage, setting strategic priorities and making use of smart policies to maximise the knowledge-based development potential of any region, strong or weak, high-tech or low-tech'(S3 Platform website). This paper looks at the capacity of the smart specialization approach to attain the aims that it alleges to pursue, namely the aptitude to simultaneously respond to cohesion and innovation, questioning if smart specialization is able to bridge efficiency and equity which inspire innovation and cohesion, respectively.
    Keywords: Cohesion policy; European Union; Innovation; smart specialisation.
    JEL: O31 O33 R11 R58
    Date: 2014–11
  9. By: Balázs Páger
    Abstract: The theoretical concepts about entrepreneurship have changed since the last three decades. It has become one of the most crucial factors in the economic processes. These changes in the theories about entrepreneurships have been supported by the shift in the whole economic environment. If we look the comparison of the managed economy and the entrepreneurial economy (Audretsch and Thurik 2001), it can be seen clearly those shifts which contributed to become entrepreneurship an important factor in the economic development. Entrepreneurships are embedded in that socio-economic environment, where they continue their economic activity. The entrepreneurship is influenced by those negative and positive factors (for example other institutions and actors, connections, externalities) which can be attributed to regional factors. It can be assumed that the regional context of the institutional and individual factors has a crucial role in the entrepreneurial performance of a given territory. If the definition of entrepreneurship has been looked, it can be observed that entrepreneurship is a multi-dimensional concept. This multi-dimensional character would require a complex view and measure of entrepreneurship. The Global Entrepreneurship and Development Index (GEDI) is a measure of entrepreneurship based on a system view (Ãcs et al 2013). Its methodology has been applied for the regional measurement of entrepreneurial performance which is called Regional Entrepreneurship and Development Index (REDI) (Szerb et al 2014). The REDI components, so-called pillars, have two components, and consequently two types of variables reflecting to the parts of the individual and institutional context of entrepreneurship. This paper focuses on the entrepreneurial performance of Central and Eastern European (CEE) regions which have been measured by the REDI. The performances of the CEE countries are compared with other European regions and they have been analysed on their own as well. It can be observed that CEE regions have relatively poor entrepreneurial performance amongst the European regions. As the regions' performance were compared to one another it can be observed that there are some factors which are weak not only on the regional but on the national level as well. One of the most important characters in the CEE regions is the high difference between the capital city and the other regions. It could mean that the economic weight and the entrepreneurial performance of the non-capital regions are relatively small.
    Keywords: entrepreneurship; regional development; CEE regions;
    JEL: L26 O18
    Date: 2014–11
  10. By: Anirban Ghosh (Georgetown University); Anna Maria Mayda (Georgetown University); Francesc Ortega (Queens College, CUNY)
    Abstract: Many U.S. businessmen are vocally in favor of an increase in the number of H-1B visas. Is there systematic evidence that this would positively affect firms' productivity, sales, employment or profits? To address these questions we assemble a unique dataset that matches all labor condition applications (LCAs) - the first step towards H-1B visas for skilled foreign-born workers in the U.S. - with firm-level data on publicly traded U.S. firms (from Compustat). Our identification is based on the sharp reduction in the annual H-1B cap that took place in 2004, combined with information on the degree of dependency on H-1B visas at the firm level as in Kerr and Lincoln (2010). The main result of this paper is that if the cap on H-1B visas were relaxed, a subset of firms would experience gains in average labor productivity, firm size, and profits. These are firms that conduct R&D and are heavy users of H-1B workers - they belong to the top quintile among filers of LCAs. These empirical findings are consistent with a heterogeneous- firms model where innovation enhances productivity and is subject to fixed costs.
    Date: 2014–11
  11. By: Vladimir Malov
    Abstract: The appearance in scientific life some new notions and terms adequate to them is a natural process. In the field of research laws and regularities of spacial economics more and more popular now is becoming the notion of regional or territorial cluster. It should be agreed with those researchers who suppose that it is not true to identify notions of regional cluster and TIC. Elements of market relationships, attention to labor resources, attention to the regiones with well-developed structure of economy with the evaluation of effect from innovations, and evaluation of TIC competitiveness are represented in "TIC ? object" and its corresponding models quite completely. Future researchers of regional clusters may pay their attention on the following actually distinctive and unique characteristics of this new object: 1- Scale of reorganization. For TIC ? large-scaled changes in spatial structure of regional and country economy. For cluster ? small- and medium-scaled but permanent changes in the already established economical relashionships; 2- Elements of innovation. For TIC the innovations are put in projects: forecast for 15-20 years can not based on old technologies. For clusters innovations themselves are the product and objective of their activity within all period of innovations' life. We can say that innovation is a "criterion" for future model of cluster; 3- Information environment. For "TIC ? object" as it is an entity created for solving tasks of national economy level, information is not "limited resource". For cluster the aspect of information between interfacing elements (firms, companies, organizations) should be important to ensure their competitiveness with the help of constant developing and introducing innovations to market; 4- Target missions. TIC is an efficient instrument in the area of realization of regional economic policy by the state. The detection of existing and/or prospective clusters should probably give a signal to companies for closer interacting and to regional authorities to promote such interaction. The notion of territorial industrial complex have not denied notion energy production cócle. TIC notion supplemented them with new characteristics whose importance was growing in time. Changes of social relationships and appearance of new tasks for spatial development absolutely require an adequate answer in conceptual and dictionary models.
    Keywords: Territorial industrial complexes; clusters; market relationships; regional economic policy; models
    Date: 2014–11
  12. By: Artur da Rosa Pires (University of Aveiro); Martina Pertoldi (European Commission – JRC - IPTS); John Edwards (European Commission – JRC - IPTS); Fatime Barbara Hegyi (European Commission – JRC - IPTS)
    Abstract: This Policy Brief has the twin aims of showing that Research and Innovation Strategies for Smart Specialisation (S3), despite their sectoral origins, provide a favourable and supportive framework for innovation in rural areas and, on the other hand, that there is a wide range of innovation activities in rural areas, often unmentioned in the innovation policy literature, which can strongly benefit from and reinforce the impact of the new generation of European Regional Policy. The paper discusses the most significant elements of S3 related to regional development in rural areas, presenting the main challenges and opportunities for knowledge-led development with reference to both the current policy and theoretical landscapes and some relevant emerging regional experiences. In particular, we investigate how the main novelties of S3 seem able to overcome the urban bias of past innovation policies, when the rural dimension of innovation has often been neglected, affecting its contribution to economic growth and regional development related to rural resources and actors.
    Keywords: Smart specialisation, rural innovation, regional development, cross-sectoral policy alignment.
    Date: 2014–11
  13. By: Dirk Assmann; Johannes Stiller
    Abstract: The aim of this paper is to develop a spatial model that explicitly incorporates the different types of knowledge spillovers taking place in cities and to show how they affect the migration decision of individuals and the size of cities. We use a static general equilibrium framework with two types of labor (highly and less educated) and two asymmetric locations: The city and the periphery, where only the city provides highly educated workers with the opportunity to exchange knowledge via face-to-face interactions. Our model incorporates two forms of knowledge spillovers happening in these meetings whose intensities are dependent on the similarity of knowledge background of the interacting individuals: First, the individual build-up of skills through the process of learning increases in the similarity of knowledge backgrounds. And second, innovative output generated in a meeting decreases in the similarity of knowledge backgrounds. This reflects the general sentiment that diversity stimulates the emergence of groundbreaking innovations. We see that highly educated workers only focus on the build-up of their personal skills when deciding about the range of individuals in the city they accept to be matched with, whereas innovative output is seen as a by-product of the process of learning. The interplay of agglomeration and dispersion forces determines the allocation of workers in the spatial equilibrium. Moving to the city gives them the chance to increase their personal effectiveness through the process of learning in face-to-face meetings. On the other hand there are two dispersion forces at work: First, the crowding effect in the regional housing and decreasing returns to scale to supplied work. However, the equilibrium allocation of workers across the two regions is socially inefficient. As mentioned above highly educated workers only focus on the build-up of personal skills since the increase in personal effectiveness is directly compensated by firms. A Social Planner however, would recognize that meetings between more diverse individuals in the city would have a positive impact on innovative output. This inefficient decision additionally implicates that agglomeration forces do not reach their optimal extent and create cities that are smaller than socially optimal. The intuition behind this result is simple. People move to the city to maximize their personal outcome, but do not take into account their impact on the emergence of innovations, that are available for everyone. We are the first to explicitly model the impact of different forms of knowledge spillovers on agglomeration forces. We believe that our model's insights on the microfoundations of different types of knowledge spillovers provide a valuable contribution to the understanding of empirical observations like the skill and urban wage premium, because it offers the possibility to look at the forces at work affecting the empirical findings.
    Keywords: Imitation; Innovation; Matching; Knowledge Spillovers;
    JEL: R12 J24
    Date: 2014–11
  14. By: Luca Amendola (ITP, University of Heidelberg)
    Abstract: The number of Italian firms in function of the number of workers is well approximated by an inverse power law up to 15 workers but shows a clear downward deflection beyond this point, both when using old pre-1999 data and when using recent (2014) data. This phenomenon could be associated with employent protection legislation which applies to companies with more than 15 workers (the Statuto dei Lavoratori). The deflection disappears for agriculture firms, for which the protection legislation applies already above 5 workers. In this note it is estimated that a correction of this deflection could bring an increase from 3.9 to 5.8% in new jobs in firms with a workforce between 5 to 25 workers.
    Date: 2014–12
  15. By: Andre Chagas; Alexandre Almeida
    Abstract: In 2006 was approved, in Brazil, a new regulatory framework, named General Law of Micro and Small Enterprises (MSEs), regulating and expanding special conditions for MSEs - that representing more than 90% of companies in Brazil. The Law introduces differential treatment to MSEs for starting a business, reducing legal requirements, and providing differential treatment for government purchases, among others. In São Paulo state, the Law was promulgated in late 2007. About 340 municipalities (out of 648) approved local laws in the same way of National one. Among these, in 91 municipalities already there evidence that these points are actually implemented. The objective of this study is to estimate the effect of regulation of the MSEs' General Law in municipalities of the state of São Paulo over economic indicators. We use a treatment effect analysis, and we distinguish the municipalities that received treatment (implemented the local laws) who did not (other municipalities). The municipalities, however, do not have the same probability of belonging to one group or another. Observables variables can distinguish the two groups, such as the importance of industry and specialized services, activities of trade associations, formalization rate of hand labor, number of micro and small enterprises before implementation, and etc. Specifically, factors such as location and proximity to other cities that implemented the Act may also influence. In a sense, the spatial distribution of the implementation of Law over time can also be considered as an important factor for future implementations. This fact introduces a selection bias when comparing sets of municipalities whose possibilities were different and that therefore the best answer is different. We use a spatial propensity score matching to control the potential effect of neighbor municipalities through the probability of selection. Thus, we select those municipalities that have not implemented the law with similar observables characteristics to cities that implemented, to constitute a control group for purposes of evaluating the performance of treated municipalities. As the effect of the treatment can be given in time, can also, depending on the available database, subdivide the group of municipalities treated over time, making sure the effect is greater in those who longest time implemented the Law.
    Keywords: spatial propensity score matching; Micro and Small Enterprises; treatment effect;
    JEL: C31 R12 R58
    Date: 2014–11
  16. By: Di Caro, Paolo
    Abstract: This paper analyses regional resilience and local economic growth patterns in Italy over the past four decades. Place-specific transient and permanent effects of aggregate employment shocks are studied. Geographical asymmetries in engineering and ecological resilience are found, providing auxiliary insights on the rooted Italian regional inequalities. The territorial impact of different crises is investigated and a direct comparison with the UK case is offered. The importance of manufacturing activities for explaining economic resilience is assessed, finding out a positive relation between the resilience of the industrial sector and the overall local economic development. Some policy implications are conclusively discussed.
    Keywords: recessions, recoveries, regional resilience, local economic growth
    JEL: E32 R1
    Date: 2014
  17. By: Marcus Berliant; Masahisa Fujita
    Abstract: This paper presents a new framework for modeling the fine microstructure of knowledge creation dynamics. Our focus is on the creation of working nowledge used in innovation, for example, the knowledge used by a researcher in the economics profession. The framework has been developed to address the following questions: What is the appropriate way to model the operational structure of working knowledge? How are specific new ideas, research papers, and patents created by a research worker or a group of them, based on the current stock of knowledge? What roles do dynamics, heterogeneity of ideas, heterogeneity of researchers, and cities or regions play? Using our framework, first we study how a researcher creates a new literature, choosing new assumptions, models, implications, and observations in each step. Next, we examine how two researchers interact in creating new complete literatures together. Finally, we discuss how to extend the analysis to N-person case in multiple cities or regions. In the last NARSA meetings in Atlanta, we presented preliminary results on the same topic. In this paper, we report further advances on modeling the fine microstructure of knowledge creation dynamics.
    Keywords: knowledge creation; dynamics; cities; regions
    Date: 2014–11

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