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Why so many local entrepreneurs?

Michelacci, Claudio and Silva, Olmo (2005) Why so many local entrepreneurs? CEMFI Working Paper, 0506. Centro de Estudios Monetarios y Financieros, Madrid, Spain.

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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. Firms 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 persistent disparities in entrepreneurial activity, technology, and income.

Item Type: Monograph (Working Paper)
Official URL: http://www.cemfi.es
Additional Information: © 2005 Centro de Estudios Monetarios y Financieros
Library of Congress subject classification: H Social Sciences > HD Industries. Land use. Labor
Journal of Economic Literature Classification System: O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O16 - Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
Z - Other Special Topics > Z1 - Cultural Economics; Economic Sociology; Economic Anthropology > Z13 - Social Norms and Social Capital; Social Networks
J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Departments > Geography and Environment
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Identification Number: 0506
Date Deposited: 29 Oct 2008 16:51
URL: http://eprints.lse.ac.uk/13328/

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