Entries and Regional Growth: The Role of Relatedness

Tijl Hendrich (), Jennifer Buurma-Olsen () and Judith Bayer
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Tijl Hendrich: CPB Netherlands Bureau for Economic Policy Analysis
Jennifer Buurma-Olsen: CPB Netherlands Bureau for Economic Policy Analysis

No 433, CPB Discussion Paper from CPB Netherlands Bureau for Economic Policy Analysis

Abstract: If new businesses and establishments are more closely related to economic activities taking place in a region, is this associated with higher regional growth a few years later? In this paper, we investigate the relationship between this 'relatedness' of newcomers and growth in employment and labor productivity in Dutch regions. While we find a positive correlation with regional employment growth, its economic magnitude is small. It is known that new companies can stimulate growth through creative destruction: they push existing less productive companies out of the market or force them to produce more efficiently. New companies can also create knowledge spillovers by introducing new ideas or techniques that disseminate on a local scale. The current research examines these two aspects in conjunction. We consider two industries to be related when their employees possess similar skills. It will then be easier for employees to switch jobs and transfer knowledge between these two sectors.

JEL-codes: L26 M13 O18 R11 (search for similar items in EconPapers)
Date: 2022-01
New Economics Papers: this item is included in nep-ent, nep-geo, nep-sbm, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:cpb:discus:433

DOI: 10.34932/jpdz-jt86

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