Abstract

http://ssrn.com/abstract=1788146
 


 



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


Sabrina Lucia Di Addario


Bank of Italy

Daniela Vuri


University of Rome Tor Vergata; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

September 15, 2010

Bank of Italy Temi di Discussione (Working Paper) No. 775

Abstract:     
We analyse empirically the effects of urbanization on Italian college graduates' work possibilities as entrepreneurs three years after graduation. We find that doubling the population density of the province of work 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. Provincial competition, urban amenities and disamenities, 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 the benefits of urbanization externalities: doubling the population density of the province of work increases entrepreneurs' net monthly earnings by 2-3 per cent.

Number of Pages in PDF File: 39

Keywords: Labour market transitions, urbanization

JEL Classification: R12, J24, J21

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Date posted: March 24, 2011  

Suggested Citation

Di Addario, Sabrina Lucia and Vuri, Daniela, Entrepreneurship and Market Size: The Case of Young College Graduates in Italy (September 15, 2010). Bank of Italy Temi di Discussione (Working Paper) No. 775. Available at SSRN: http://ssrn.com/abstract=1788146 or http://dx.doi.org/10.2139/ssrn.1788146

Contact Information

Sabrina Lucia Di Addario (Contact Author)
Bank of Italy ( email )
Via 20 settembre, 97/e
00187 Rome, I - 00184
Italy
+39 06 4792 3458 (Phone)
+39 06 4792 5626 (Fax)
HOME PAGE: http://sites.google.com/site/sabrinadiaddario/
Daniela Vuri
University of Rome Tor Vergata ( email )
Via di Tor Vergata
Rome, 00133
Italy
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
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