Scandinavian Working Papers in Economics

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

No 190: Agglomeration Externalities and Entrepreneurship - micro-level evidence from Sweden

Apostolos Baltzopoulos ()
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Apostolos Baltzopoulos: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden

Abstract: Past research on the effects of agglomeration externalities on regional economic development is inconclusive and has focused mainly on employment growth and innovative output. This paper considers the link between agglomeration externalities and entrepreneurship. It does so by looking at the importance of Marshallian specialization and Jacobian diversity externalities for regional entrepreneurial output implementing an individual level data set that allows considering not only the effect on total number of start-ups but also on the propensity of the entrepreneur to start his new venture in an industry he has previous experience in. The results suggest that while Marshallian externalities have a positive, Jacobian externalities have a negative effect on regional entrepreneurial output. However, Jacobian externalities increase the probability that an entrepreneur will start a firm in an industry he has relevant experience in, especially in the case of knowledge intensive industries.

Keywords: Entrepreneurship; externalities; spatial agglomeration

JEL-codes: O12; O18; R11; R30

28 pages, August 26, 2009

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