The effect of new firm formation on regional development over time

Michael Fritsch () and Pamela Mueller

No 2004/01, Freiberg Working Papers from TU Bergakademie Freiberg, Faculty of Economics and Business Administration

Abstract: In our analysis of the impact of new firm formation on regional employment change we identified considerable time lags. We investigated the structure and extent of these time lags by applying the Almon lag model and found that new firms can have both a positive and a negative effect on regional employment. The results indicate that the indirect effects of new firm formation (crowding-out of competitors, improvement of supply conditions and improved competitiveness) are of greater magnitude than the direct effect, i.e., the jobs that are created in the new businesses. The peak of the positive impact of new firms on regional development is reached about eight years after the new firms have been started.

Keywords: Regional growth; new firms; entrepreneurship; time lags; Regionalentwicklung; Unternehmensgründungen; Entrepreneurship; Time Lags (search for similar items in EconPapers)
JEL-codes: M13 O1 O18 R11 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (64)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:tufwps:200401

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