Who Creates New Firms When Local Opportunities Arise?
IMF Working Papers, September 28, 2018
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- Who Creates New Firms When Local Opportunities Arise?
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Bibliographic details
- Authors: Shai Bernstein, Emanuele Colonnelli, Davide Malacrino, Tim McQuade
- Published: September 28, 2018
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781484377833.001
Research question and methodology
- Examines the characteristics of individuals who become entrepreneurs when local opportunities arise due to an increase in local demand.
- Identifies local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil.
- Authors: Shai Bernstein, Emanuele Colonnelli, Davide Malacrino, Tim McQuade.
- Publication date: September 28, 2018.
- Format: IMF Working Papers; Working Paper No. 2018/215; Issue: 215; Volume: 2018; Pages: 73.
- DOI: https://doi.org/10.5089/9781484377833.001
- Stock No: WPIEA2018215; ISBN: 9781484377833; ISSN: 1018-5941.
Key empirical findings
- The firm creation response to local demand shocks is almost entirely driven by young and skilled individuals.
- Skill measures driving the response include level of experience, education, and past occupations involving creativity, problem-solving, and managerial roles.
- No comparable firm creation response is observed among skilled, yet older individuals within the same municipalities — highlighting lifecycle considerations.
- Individuals who respond are younger and more skilled than the average entrepreneur in the population.
- The entrepreneurial response of young individuals is larger in municipalities with better access to finance.
- The entrepreneurial response of young individuals is larger in municipalities with more skilled human capital.
- Implication: the characteristics of the local population significantly affect entrepreneurial responsiveness to local demand shocks.
Thematic subjects and keywords
- Subject: Commodities; Economic sectors; Employment; Financial crises; Labor; Labor force; Population and demographics; Self-employment.
- Keywords (as provided): Commodities, created firm, creation response, Employment, Entrepreneurship, experience distribution, fertility rate, Financial Development, firm creation rate, firm entry response, Firms, Global, heterogeneous firm, Labor force, marginal revenue, Self-employment, time series.
Policy-relevant implications (derived from findings)
- Local policies that enhance access to finance may amplify young individuals’ propensity to create firms when local demand rises.
- Investments in local human capital that increase the stock of skilled individuals can strengthen entrepreneurial responsiveness to demand shocks.
- Lifecycle-targeted measures recognizing that younger, skilled individuals are more responsive could improve job-creation outcomes following local demand expansions.
IMF Working Paper: "Who Creates New Firms When Local Opportunities Arise?", Shai Bernstein, Emanuele Colonnelli, Davide Malacrino, Tim McQuade, September 28, 2018; Working Paper No. 2018/215.
Content in this bundle
- Who Creates New Firms When Local Opportunities Arise?, WP/18/215, September 2018