An Analysis of the Relationship Between New Firm Formation and Economic Development in the Northeast Region of the United States

Saima Bashir () and Tesfa Gebremedhin ()
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Saima Bashir: Department of Resource Management, West Virginia University
Tesfa Gebremedhin: Department of Resource Management, West Virginia University

Working Papers from Regional Research Institute, West Virginia University

Abstract: The overall objective of this study is to provide policy makers with information on the role of new firm formation in the economic development in the Northeast region of the United States. This study identifies and estimates the impacts of new firm formation in the economic development of the Northeast region. The empirical model of this study is derived from the three-equation simultaneous model of Deller et al. (2001). In this study, Three Stage Least Squares (3SLS) method is used to estimate the simultaneous equations model. The research findings indicate that population density and per capita income have a positive link with new firm formation. Higher population density and per capita income encourage entrepreneurs to start new firms in the region. This leads to an increase of new jobs, which is a positive contribution to economic development in the Northeast region.

Keywords: New Firm Formation; economic development; northeast region; simultaneous analysis (search for similar items in EconPapers)
JEL-codes: O2 O21 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2011-02
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:rri:wpaper:2011wp02

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