Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labor Demand?

32 Pages Posted: 8 Apr 2003

See all articles by Rainer Fehn

Rainer Fehn

CESifo (Center for Economic Studies and Ifo Institute)

Thomas Fuchs

Ifo Institute for Economic Research

Date Written: March 2003

Abstract

This paper analyses the influence of the capital market on the labour market. Especially the impact of start-up financing on the structure of unemployment is of interest. We use a cross-country panel data analysis to examine how venture capital investment influences disaggregate unemployment. As we expected, venture capital investment has different influences on sectoral-, educational- and occupational-specific unemployment. We suggest, on the basis of the regression results, that venture capital investment is a catalyst of structural change and has contributed to the faster growing internet and new economy sector in countries like the U.S. that have a well-developed venture capital market.

Keywords: Labor Markets, Venture Capital, Employment, New Economy, Panel Analysis

JEL Classification: E22, E24, E44, G24, G32

Suggested Citation

Fehn, Rainer and Fuchs, Thomas, Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labor Demand? (March 2003). CESifo Working Paper Series No. 898. Available at SSRN: https://ssrn.com/abstract=388642

Rainer Fehn (Contact Author)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Thomas Fuchs

Ifo Institute for Economic Research ( email )

Munich
Germany

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