Capital Market Institutions and Venture Capital: Do They Affect Unemployment and Labor Demand?
32 Pages Posted: 8 Apr 2003
Date Written: March 2003
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
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