Local Economic Shocks and Entrepreneurship Dynamics

Gabriel Rodríguez-Puello () and Orsa Kekezi ()
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Gabriel Rodríguez-Puello: Jönköping International Business School, Jönköping University
Orsa Kekezi: Swedish Institute for Social Research, Postal: SOFI, Stockholm University, SE-106 91 Stockholm, Sweden

No 13/2025, SOFI Working Papers in Labour Economics from Stockholm University, Swedish Institute for Social Research

Abstract: This paper examines how local economic shocks affect entrepreneurship, considering entry (extensive margin) and performance of existing entrepreneurs and their firms (intensive margin). Exploiting Sweden’s 2004 mining boom as an exogenous shock, we use administrative data (2000–2015) and difference-in-differences estimates comparing individuals within 80 km of a mine to those 80–150 km away. The boom increased entrepreneurial entry but not the number of new firms, as many entrants were hybrid entrepreneurs reallocating effort to existing ventures. Incumbents gained through higher capital income and lower exit risk, while treated firms expanded employment and wage costs without improving operating profits.

Keywords: economic shocks; mining boom; entrepreneurship; businesses (search for similar items in EconPapers)
JEL-codes: L26 O13 Q33 R23 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2025-12-08
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