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

21 Pages Posted: 2 Aug 2010

See all articles by Sabrina Lucia Di Addario

Sabrina Lucia Di Addario

Bank of Italy

Daniela Vuri

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

Multiple version iconThere are 6 versions of this paper

Abstract

We analyze empirically the effects of urban agglomeration on Italian college graduatesメ work possibilities as entrepreneurs three years after graduation. We find that each 100,000 inhabitant-increase in the size of the individualメs province of work reduces the chances of being an entrepreneur by 0.2-0.3 percent. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Provinceメs competition, urban amenities and dis-amenities, cost of labor, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for 40 percent of the negative urbanization penalty. Our result cannot be explained by the presence of negative large-city differentials in returns to education either. In fact, as long as they succeed in entering the largest markets, young entrepreneurs are able to reap-off the benefits of urbanization externalities: every 100,000-inhabitant increase in the province's population raises entrepreneurs' net monthly income by 0.2-0.3 percent.

Keywords: labor market transitions, urbanization

JEL Classification: R12, J24, J21

Suggested Citation

Di Addario, Sabrina Lucia and Vuri, Daniela, Entrepreneurship and Market Size: The Case of Young College Graduates in Italy. IZA Discussion Paper No. 5098. Available at SSRN: https://ssrn.com/abstract=1651743

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, Lazio 00133
Italy

IZA Institute of Labor Economics

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

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
18
Abstract Views
592
PlumX Metrics