| 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. |