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Self-employment and entrepreneurship in urban and rural labour markets

Faggio, Giulia and Silva, Olmo (2014) Self-employment and entrepreneurship in urban and rural labour markets. Journal of Urban Economics, 84. pp. 67-85. ISSN 0094-1190

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Identification Number: 10.1016/j.jue.2014.09.001

Abstract

We study the link between self-employment and some salient aspects of entrepreneurship – namely business creation and innovation – in urban and rural labour markets. In order to do so, we combine individual and firm-level data for Britain aggregated at the Travel-to-Work Area level. We find that a higher incidence of self-employment positively and strongly correlates with business creation and innovation in urban areas, but not in rural areas. We also document that more rural than urban workers become self-employed in areas with comparably poor labour market opportunities, although this heterogeneity is not evident when focussing on entrepreneurship. Finally, we show that the misalignment between self-employment and our proxies for entrepreneurship in rural areas disappears once we account for local labour market conditions. Our results suggest that self-employment, business creation and innovation are well lined-up in urban areas because they capture the same economic phenomenon – namely, genuine entrepreneurship. This is not the case for rural areas.

Item Type: Article
Official URL: http://www.sciencedirect.com/science/journal/00941...
Additional Information: © 2014 The Authors. Published by Elsevier Inc. © CC BY 3.0
Divisions: Geography & Environment
Spatial Economics Research Centre
Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 28 Oct 2014 13:50
Last Modified: 28 Oct 2014 13:59
URI: http://eprints.lse.ac.uk/id/eprint/59968

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