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Explaining Regional Variations in Entrepreneurship as Multiple Occupational Equilibria

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  • Simon C. Parker

Abstract

. The paper proposes a human capital‐based model of choice between paid employment and entrepreneurship that can give rise to multiple equilibria in occupational structure. The model is consistent with evidence of pronounced, persistent, and hitherto unexplained regional variations in entrepreneurship. Whether multiple equilibria emerge is shown to depend on the occupation‐specific productivity of human capital and the costs of human and financial capital. The paper goes on to discuss the implications for governments seeking to promote entrepreneurship as a tool of regional development policy.

Suggested Citation

  • Simon C. Parker, 2005. "Explaining Regional Variations in Entrepreneurship as Multiple Occupational Equilibria," Journal of Regional Science, Wiley Blackwell, vol. 45(4), pages 829-850, November.
    • Handle: RePEc:bla:jregsc:v:45:y:2005:i:4:p:829-850
    DOI: 10.1111/j.0022-4146.2005.00394.x
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    References listed on IDEAS

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    1. William J. Baumol, 2004. "Education for Innovation: Entrepreneurial Breakthroughs vs. Corporate Incremental Improvements," NBER Working Papers 10578, National Bureau of Economic Research, Inc.
    2. Acs, Zoltán J & Audretsch, David B & Evans, David S, 1994. "Why Does the Self-Employment Rate Vary Across Countries and Over Time?," CEPR Discussion Papers 871, C.E.P.R. Discussion Papers.
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