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CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology KTH/CESIS Working Paper Series in Economics and Institutions of Innovation

No 404:
The location of new firms - Influence of commuting behaviour

Mikaela Backman () and Charlie Karlsson ()

Abstract: In this paper, we analyse where people who become self-employed actually start their firms. In the entrepreneurship literature, it is generally assumed that individuals who start a firm start it where they live. We question this general assumption and show that this does not hold for commuters. Our results show that of those individuals that were short-distance commuters in 2007 and become self-employed in 2008, 90.1 percent started their firm in their work munici-pality. Only 9.4 percent started their firm in their residence municipality. For long-distance commuters, the figures were 93.6 and 6.4 percent, respectively. Our econometric estimations show that the probability to start a firm in the work municipality increases with the number of years as a commuter, with commuting to a larger municipality, and with the relative size of the work municipality compared to the municipality of residence. Our results indicate that the entrepreneurship literature must reconsider its general statement that individuals start firms where they live.

Keywords: Entrepreneurship; self-employment; location; commuting; networks; micro-level data; (follow links to similar papers)

JEL-Codes: C21; J24; L26; R12; (follow links to similar papers)

20 pages, May 7, 2015

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