Entrepreneurship and market size. The case of young college graduates in Italy

Sabrina Di Addario and Daniela Vuri ()

No 775, Temi di discussione (Economic working papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: We analyse empirically the effects of urbanization on Italian college graduates' work possibilities as entrepreneurs three years after graduation. We find that doubling the population density of the province of work reduces the chances of being an entrepreneur by 2-3 percentage points. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Provincial competition, urban amenities and disamenities, cost of labour, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for more than half of the negative urbanization penalty. Our result cannot be explained by the presence of negative differentials in returns to entrepreneurship between the most and the least densely populated areas either. In fact, as long as they succeed in entering the most densely populated markets, young entrepreneurs are able to reap the benefits of urbanization externalities: doubling the population density of the province of work increases entrepreneurs' net monthly earnings by 2-3 per cent.

Keywords: Labour market transitions; urbanization (search for similar items in EconPapers)
JEL-codes: J21 J24 R12 (search for similar items in EconPapers)
Date: 2010-09
New Economics Papers: this item is included in 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 (27)

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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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