Local Agglomeration, Entrepreneurship and the Great Recession: Evidence from Italian Industrial Districts

37 Pages Posted: 19 Jul 2014

See all articles by Giorgio Brunello

Giorgio Brunello

University of Padua - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute for Economic Research); Institute for the Study of Labor (IZA)

Monica Langella

University of Verona

Abstract

We ask whether local agglomeration affects how recessions impact on entrepreneurship by comparing the probability of being an entrepreneur before and after the Great 2008 Recession in local labour markets where industrial districts are present and in comparable areas. Using Italian Labour Force quarterly data from 2006 to 2011 and a "difference-in-differences" approach, we find that for males aged 40 to 55, who are more likely to be entrepreneurs, the negative effect of the recession on entrepreneurship has been sharper in areas with industrial districts. After examining alternative explanations – ranging from specialization to access to credit, from propensity to export to the industrial sector – we conclude that our findings are consistent with the view that intense social interaction in industrial districts acts as a multiplier that amplifies the response to shocks.

Keywords: entrepreneurship, recession, Italy, industrial districts

JEL Classification: J21, J24

Suggested Citation

Brunello, Giorgio and Langella, Monica, Local Agglomeration, Entrepreneurship and the Great Recession: Evidence from Italian Industrial Districts. IZA Discussion Paper No. 8331, Available at SSRN: https://ssrn.com/abstract=2468507 or http://dx.doi.org/10.2139/ssrn.2468507

Giorgio Brunello (Contact Author)

University of Padua - Department of Economics ( email )

via Del Santo 33
35121 Padova
Italy
+39 049 827 4223 (Phone)
+39 049 827 4221 (Fax)

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Institute for the Study of Labor (IZA)

P.O. Box 7240
Bonn, D-53072
Germany

Monica Langella

University of Verona

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