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Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth

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  • Michael Fritsch

    (Friedrich Schiller University Jena, School of Economics and Business Administration)

  • Florian Noseleit

    (Friedrich Schiller University Jena, School of Economics and Business Administration)

Abstract

We investigate the effects that regional start-up activity has on employment in new and in incumbent businesses. The analysis is performed for West German regions over the 1987-2002 period. It shows that the effects of new businesses on employment in the incumbents are significantly positive and that this indirect effect on incumbent employment leads to more jobs than what is created by the newcomers. We find that the effect of new business formation on incumbents is exclusively driven by start-ups that survive a certain period of time. We draw conclusions for policy and for further research.

Suggested Citation

  • Michael Fritsch & Florian Noseleit, 2009. "Start-ups, Long- and Short-Term Survivors and their Effect on Regional Employment Growth," Jena Economics Research Papers 2009-081, Friedrich-Schiller-University Jena.
    • Handle: RePEc:jrp:jrpwrp:2009-081
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    Cited by:

    1. Fritsch, Michael, 2013. "New Business Formation and Regional Development: A Survey and Assessment of the Evidence," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 9(3), pages 249-364, February.
    2. Heike Delfmann & Sierdjan Koster, 2016. "The effect of new business creation on employment growth in regions facing population decline," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 33-54, January.
    3. Niclas Lavesson, 2018. "How does distance to urban centres influence necessity and opportunity‐based firm start‐ups?," Papers in Regional Science, Wiley Blackwell, vol. 97(4), pages 1279-1303, November.
    4. Michael Fritsch, 2011. "The effect of new business formation on regional development - Empirical evidence, interpretation, and avenues for further research," Jena Economics Research Papers 2011-006, Friedrich-Schiller-University Jena.
    5. Michael Fritsch & Alexandra Schroeter, 2011. "Does Quality Make a Difference? Employment Effects of High- and Low-Quality Start-Ups," Jena Economics Research Papers 2011-001, Friedrich-Schiller-University Jena.
    6. Michael Fritsch & Florian Noseleit, 2013. "Indirect employment effects of new business formation across regions: The role of local market conditions," Papers in Regional Science, Wiley Blackwell, vol. 92(2), pages 361-382, June.
    7. Ugo Rizzo & Francesco Nicolli & Laura Ramaciotti, 2014. "The Heterogeneity of the Development Process of New Technology-Based Firms. Implication for Innovation Policies," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 5(1), pages 114-132, March.
    8. Heike Delfmann & Sierdjan Koster, 2016. "The effect of new business creation on employment growth in regions facing population decline," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(1), pages 33-54, January.
    9. Yvonne Schindele & Michael Fritsch & Florian Noseleit, 2011. "Micro-level Evidence on the Survival of German Manufacturing Industries - A Multidimensional Analysis (refereed paper)," ERSA conference papers ersa10p549, European Regional Science Association.

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    More about this item

    Keywords

    Entrepreneurship; new business formation; regional development; direct and indirect effects;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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