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The Impact of Geographic Differences in Human Capital on Service Firm Formation Rates

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  • Zoltan J. Acs
  • Catherine Armington

Abstract

Although human capital externalities are a key variable in theories of economic growth, there has been little investigation of the mechanism by which these externalities are realized. We examine the relationship between the local levels of human capital and firm formation rates and find that formation rates differ with the share of adults with college degrees, especially for industries that normally require college-educated founders. They also differ strongly with the local concentration of existing establishments in the same sector, especially for industries serving non-local markets, suggesting that an important mechanism is the spillover of relevant knowledge.

Suggested Citation

  • Zoltan J. Acs & Catherine Armington, 2004. "The Impact of Geographic Differences in Human Capital on Service Firm Formation Rates," Papers on Entrepreneurship, Growth and Public Policy 2004-15, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    • Handle: RePEc:esi:egpdis:2004-15
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    More about this item

    Keywords

    Firm formation; Knowledge spillovers; Entrepreneurship; Human capital; Regional growth;
    All these keywords.

    JEL classification:

    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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