The factors determining firm start-ups in French regions and the heterogeneity of regional labor markets

Abstract

International audienceThis paper investigates the determinants of business start-ups in the 22 French regions, considering four different sectors (industry, real estate, trade and services) over 1995–2004. The main innovation of the paper was to analyze regional differences in the decision to start a new business on a sector basis. Using spatial statistics and dynamic panel data methods, we estimate spatial regimes models. First, we show that regional factors determining new firm start-ups differ between sectors. Second, the estimation results are consistent with the existence of spatial heterogeneity. Finally, we observe persistence in start-up rates

The effect of house prices on business start-ups: A review and analysis using Swedish regional data

“…The same is true for an increase in the variables number of employees, income level, as well as unemployment rate. Our results are consistent with the findings of Armington, Acs (2002) and, more recently, Adelino et al (2015) and Binet, Facchini (2015). The spillover effect (indirect effect) concerning human capital is negative indicating that lower human capital in neighboring municipalities is associated with fewer startups.…”

“…In contrast to Binet, Facchini (2015), we estimate three types of spatial autoregressive models, a spatial lagged model and a spatial error model, as a means to control spatial dependence. We also estimate a spatial Durbin model in order to analyze if it could be simplified to a spatial error or lag model.…”

“…Both measures, number of employees in 2007 and unemployment rate in 2007, are included in the model. Number of employees measures the size of the market and is used instead of population (Binet, Facchini 2015) or number of households (Adelino et al 2015) as a measure of the market size. It is a measure that captures some of the agglomeration effects observed in the literature (see Acs et al 1994).…”

“…One of the most important determinants used in previous research is the unemployment rate (see Armington, Acs 2002) as it was suggested that unemployed workers were more likely to start new firms. The unemployment rate is also used in more recent research (Adelino et al 2015, Binet, Facchini 2015. The third labor market indicator we use is the self-employment rate in 2007.…”

“…This measure is a proxy for the level of skill and knowledge in the regional economy (see Armington, Acs 2002, and, more recently, Adelino et al 2015, Binet, Facchini 2015. The relationship between the rate of university degree completion in the population and new firm formation is expected to be positive.…”