Explaining Regional Variations in Entrepreneurship as Multiple Occupational Equilibria

22 Pages Posted: 9 Nov 2005

See all articles by Simon C. Parker

Simon C. Parker

University of Western Ontario; Durham University - Department of Economics and Finance; IZA Institute of Labor Economics

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Abstract

The paper proposes a human capital-based model of choice between paid employment and entrepreneurship that can give rise to multiple equilibria in occupational structure. The model is consistent with evidence of pronounced, persistent, and hitherto unexplained regional variations in entrepreneurship. Whether multiple equilibria emerge is shown to depend on the occupation-specific productivity of human capital and the costs of human and financial capital. The paper goes on to discuss the implications for governments seeking to promote entrepreneurship as a tool of regional development policy.

Suggested Citation

Parker, Simon C., Explaining Regional Variations in Entrepreneurship as Multiple Occupational Equilibria. Journal of Regional Science, Vol. 45, No. 4, pp. 829-850, November 2005. Available at SSRN: https://ssrn.com/abstract=830169

Simon C. Parker (Contact Author)

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