Entrepreneurship and Market Size: The Case of Young College Graduates in Italy

Sabrina Di Addario and Daniela Vuri ()

No 5098, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We analyze empirically the effects of urban agglomeration on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individual’s province of work reduces the chances of being an entrepreneur by 0.2-0.3 percent. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Province’s competition, urban amenities and dis-amenities, cost of labor, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for 40 percent of the negative urbanization penalty. Our result cannot be explained by the presence of negative large-city differentials in returns to education either. In fact, as long as they succeed in entering the largest markets, young entrepreneurs are able to reap-off the benefits of urbanization externalities: every 100,000-inhabitant increase in the province's population raises entrepreneurs' net monthly income by 0.2-0.3 percent.

Keywords: labor market transitions; urbanization (search for similar items in EconPapers)
JEL-codes: J21 J24 R12 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2010-07
New Economics Papers: this item is included in nep-edu, nep-ent, nep-geo, nep-lab, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (28)

Published - published in: Labour Economics, 2010, 17 (5), 848-858

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Related works:
Journal Article: Entrepreneurship and market size. The case of young college graduates in Italy (2010)
Working Paper: Entrepreneurship and market size. The case of young college graduates in Italy (2010)
Working Paper: Entrepreneurship and Market Size. The Case of Young College Graduates in Italy (2010)
Working Paper: Entrepreneurship and Market Size. The Case of Young College Graduates in Italy (2010)
Working Paper: Entrepreneurship and Market Size. The Case of Young College Graduates in Italy (2009)
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