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Why so many local entrepreneurs?

Michelacci, Claudio and Silva, Olmo (2007) Why so many local entrepreneurs? Review of Economics and Statistics, 89 (4). 615 - 633. ISSN 0034-6535

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Identification Number: 10.1162/rest.89.4.615


We document that the fraction of entrepreneurs working in the region where they were born is significantly higher than the corresponding fraction for dependent workers. This is more pronounced in more developed regions and positively related to the degree of local financial development. Firms created by locals are bigger, operate with more capital-intensive technologies, and obtain greater financing per unit of capital invested, than firms created by nonlocals. This 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 helps to explain how local financial development causes persistent disparities in entrepreneurial activity, technology, and income.

Item Type: Article
Official URL:
Additional Information: © 2007 The President and Fellows of Harvard College and the Massachusetts Institute of Technology
Divisions: Geography & Environment
Spatial Economics Research Centre
Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
Date Deposited: 15 Dec 2010 09:50
Last Modified: 17 Jun 2024 17:12

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