Entrepreneurship and Market Size. The Case of Young College Graduates in Italy

Arbeitspapier

We analyse empirically the effects of urbanization on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that doubling the province of work’s population density 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. Provinces’ competition, urban amenities and dis-amenities, 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-off the benefits of urbanization externalities: the elasticity of entrepreneurs’ net monthly earnings with respect to population density is 0.02-0.03.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3145

Classification and Topics

• Classification: Wirtschaft ; Labor Force and Employment, Size, and Structure ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Size and Spatial Distributions of Regional Economic Activity
• Subject: labor market transitions ; urbanization

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Di Addario, Sabrina ; Vuri, Daniela
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2010

Further information

• Handle: http://hdl.handle.net/10419/167469
• Last update: 10.03.2025, 11:44 AM CET