Reducing Start-up Costs for New Firms: The Double Dividend on the Labor Market

Uwe Dulleck (), Paul Frijters () and Rudolf Winter-Ebmer ()

No 146, Economics Series from Institute for Advanced Studies

Abstract: Starting a firm with expansive potential is an option for educated and high-skilled workers. This option serves as an insurance against unemployment caused by labor market frictions and hence increases the incentives for education. We show within a matching model that reducing the start-up costs for new firms results in higher take-up rates of education. It also leads, through a thick-market externality, to higher rates of job creation for high-skilled labor as well as average match productivity. We provide empirical evidence to support our argument.

Keywords: Matching; Education; Start-up costs; Venture capital; Bureaucratic hurdles (search for similar items in EconPapers)
JEL-codes: J24 D73 J68 (search for similar items in EconPapers)
Date: 2003-11
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http://www.ihs.ac.at/publications/eco/es-146.pdf First version, 2003 (application/pdf)

Related works:
Working Paper: Reducing Start-up costs for New Firms: The Double Dividend on the Labor Market (2006)
Working Paper: Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market (2003)
Working Paper: Reducing start-up costs for New Firms: The double dividend on the labor market (2003)
Working Paper: Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market (2004)
Working Paper: Reducing Start-up costs for New Firms: The Double Dividend on the Labor Market (2003)
Journal Article: Reducing Start-up Costs for New Firms: The Double Dividend on the Labor Market (2006)
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