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Entrepreneurship and Employment
Michael Fritsch
3rd Summer School on “Knowledge Dynamics, Industry Evolution, and Economic Development”, Nice (France)
July 11, 2014
Contact: Prof. Dr. Michael Fritsch, Friedrich Schiller University Jena, Carl-Zeiss-Str. 3, Room 5.12Phone (03641) 9 – 432 20, m.fritsch@uni-jena.dehttp://www.wiwi.uni-jena.de/uiw/index.html
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
This lecture is based on
Basic source: Fritsch, Michael (2013): New business formation and regional development - A Survey and Assessment of the Evidence. Foundations and Trends in Entrepreneurship, 9, 249–364.
Recent research papers:
Fritsch, Michael and Florian Noseleit (2013): Investigating the Anatomy of the Employment Effect of New Business Formation. Cambridge Journal of Economics, 37, 349-377.
Fritsch, Michael and Florian Noseleit (2013): Start-Ups, Long- and Short-Term Survivors, and their Contribution to Employment Growth. Journal of Evolutionary Economics, 23, 719–733.
Fritsch, Michael and Florian Noseleit (2013): Indirect Employment Effects of New Business Formation Across Regions: The Role of Local Market Conditions. Papers in Regional Science, 92, 361-382.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 2
3
Main topics
1. Development of the research field
2. Theoretical and conceptual considerations
3. Results of empirical research
4. Implications for entrepreneurship policy
5. Avenues for further research
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Joseph A. Schumpeter
Schumpeter wanted to identify the sources of economic growth. He identified entrepreneurs who revolutionized the economy by introducing radical innovation. But these Schumpeterian entrepreneurs are very, very few!
My question: What is the effect of new business formation in general on economic development?
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 4
5
The ‚Birch‘-debate
Initiated by a study of David Birch: The Job Generation Process, Boston 1979: MIT (mimeo).
Main statements of this study:
Large firms in the USA have massively reduced employment during the 1970s.
In the same time period small firms in the USA have created many new jobs.
A relatively large contribution to employment growth came from the service sector and from new businesses.
The Birch-Study induced many empirical analyses of job generation by small and new firms and a long-lasting debate about the role of small businesses, particularly new businesses, in the economy.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
6
New business formation and the market process
Start-ups or market entries
Market process (selection)
Exiting capacities: Decline or closure of
incumbents
New capacities:
Development of new
businesses
Supply-side effects:
Securing efficiency
Acceleration of structural change
Amplified innovation
Greater variety
Improvedcompetitiveness
Growth
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
New businesses
Growth
Incumbent firms
Direct effect
Indirect effect
Direct and indirect effects of new businesses on growth
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
7
Hypothesis: The indirect effect of new business formation is much larger and more important than the direct effect (= development of the start-ups).
Direct and indirect effects of new business formation on economic development
A positive effect of new business formation on employment can only result from the supply-side effects which occur rather indirectly.
If competition does not work according to a survival of the fittest scenario then the supply-side effect of new business formation can well be negative.
Not all start-ups will have the same effect on economic growth. It is particularly those start-ups that exert a strong challenge on incumbents (e.g. innovative start-ups) that have a main effect on growth.
The indirect effect will be the larger, the more productive / innovative the reaction of the incumbents.
The effects may be rather different across industries and regions.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
8
Factors that may determine the effect of new business formation on regional development
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
9
New businesses
Regional growth
Incumbent firms
Qualification of the workforce
Stage of the industry
lifecycle
Size of the region and density of
actors
Regional knowledge base
Quality of other inputs
Industry-specific conditions
Entry and exit
barriers
Regional environment
Location and accessibility
Supportive infrastructure for start-ups
Regional ‘culture’ of entrepreneurship
Number and size of
regional competitors
Market structure and intensity of competition
Thickness of local input
markets
10
Approaches to analyze the effect of new firm formation on economic development empirically
Cohort analysis.
Correlation and regression analysis (cross section, longitudinal) of the relationship between new firm formation rate and growth
at an industry level
at a regional level
Including new firm formation / entrepreneurship into a regional production function.
Dependent variable: employment, GDP, productivity (for smaller regions the available information on employment is most reliable).
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Number of firms
Time
Number of firms
Number of exits
Number of entries
Net entry
Shake out
‘Entrepreneurial‘ regime ‘Routinized‘ regime
Stylized paths in the numbers of entries, exits, and firms over the industry lifecycle
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 11
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 12
Analyzing the lag-structure of the effect of new businesses on employment – basic approach (Fritsch &
Mueller, 2004)
Regional employment change (%) t0 =
a + b1 start-up rate t0 + b2 start-up rate t-1
+ b3 start-up rate t-2 + b4 start-up rate t-3 + …
+ b11 start-up rate t-10 + cn Xn + u
Xn = further determinants,
u = stochastic error term
Method: Fixed-effects panel regression.
13
Effects of new firm formation on employment change over time – third-order polynomial
0
Impa
ct o
f new
firm
form
atio
n on
em
ploy
men
t cha
nge
0 1 2 3 4 5 6 7 8 9 10
Lag (year)
I
II
IIINew capacities
Supply-side effects
Exiting capacities
Source: Fritsch and Mueller (2004).Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 14
Evolution of employment in entry cohorts (all private industries)
employment
survival
0
10
20
30
40
50
60
70
80
90
100
110
120
130
140
150
160
Per
cent
age
0 2 4 6 8 10 12 14 16 18 20 22 24 26 28 30
Age (Year) Source: Schindele and Weyh (2011).
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 15
Direct effect
Regional data about employment cohorts of new businesses is used to analyze the direct effect.
Largest impact on total employment changewhen the new businesses enter the market.
Small positive contribution one year after start-up.
Slightly negative impact in later periods.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 16
Indirect effectsEmpirical strategy:
Regress employment change of incumbents on start-up rate of the year t=0 and of each of the preceding ten years (t-1 to t-10) indirect effect
Compute the average percentage employment change of the indirect effect“Reassemble” the overall effect
17
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Fritsch & Noseleit (2013): The employment effect of short-term and long-term survivors on regional growth
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 18
Results and conclusions
Indirect effects are quantitatively much larger than direct effects. A large part of the “Birch-debate” was misleading.
The effect may differ by type of start-up.
Short-term survivors have no significant positive effect.
The effect differs considerably by the size of the entry.
Positive effects of new business formation on economic development occur with a considerable time-lag. Long-term policy orientation needed!
Policy should not interfere with the process of market selection. No significant subsidization of new businesses after start-up!
Presumably, the quality of start-ups with regard to challenging the incumbents is important for their effects. Try to increase the quality of start-ups and/or focus on higher quality start-ups!
What makes the “quality” of a start-up?
Tautological definition: The higher the challenge for the incumbents the higher the quality of the start-up.
The quality of a new business is indicated by:
Ex ante indicators:
Innovativeness of the supplied goods and services (e.g., high tech manufacturing, knowledge intensive services, etc.) ;
Qualification of the entrepreneur (e.g., academic start-ups);
Main motivation for starting a business (e.g., ‘opportunity’ versus ‘necessity’ entrepreneurship; part time versus full time entrepreneurship);
Growth ambitions (e.g., growth oriented versus non-growth oriented new businesses);
19
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
What makes the “quality” of a start-up? (continued)
Ex ante indicators (continued):
Amount and quality of the employed resources (e.g. size of start-up, team start-up, ability to attract VC, …);
Productivity of start-up as compared to incumbents;
…
Ex post indicators:
Survival over a certain period of time;
Growth (e.g. ‘gazelles), size, market share after a certain time period ;
…
20
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
21
The relationship between start-up rate and regional employment change
-4-2
02
4
Ave
rage
cha
nge
of e
mpl
oym
ent i
n %
4 6 8 10
Average start-up rate
Oberland
Oberfranken-OstEmscher-Lippe
Ingolstadt
Dortmund
Brunswick
Cologne
Duisburg
Munich Bonn
Median value
Median value-4
-20
24
Ave
rage
cha
nge
of e
mpl
oym
ent i
n %
4 6 8 10
Average start-up rate
Oberland
Oberfranken-OstEmscher-Lippe
Ingolstadt
Dortmund
Brunswick
Cologne
Duisburg
Munich Bonn
Median value
Median value
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
22
Effects of new firm formation on employment change in different types of region (West Germany)
Source: Fritsch and Mueller (2008).
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Agglomeratedregions
Moderatelycongested regions
Ruralregions
-0.40
-0.20
0.00
0.20
0.40
Impa
ct o
f ne
w b
usi
ness
form
atio
non
em
plo
ymen
t ch
ange
0 1 2 3 4 5 6 7 8 9 10Lag (year)
Agglomeratedregions
Moderatelycongested regions
Ruralregions
-0.40
-0.20
0.00
0.20
0.40
Impa
ct o
f ne
w b
usi
ness
form
atio
non
em
plo
ymen
t ch
ange
0 1 2 3 4 5 6 7 8 9 10Lag (year)
23
Impact of new firm formation on employment change – England vs. Scotland and Wales
Scotland
England
Wales-0.9
-0.6
-0.3
0.0
0.3
0.6
0.9
1.2
1.5
Imp
act
of
ne
w f
irm
form
atio
no
n e
mp
loym
en
t ch
ang
e
t t-1 t-2 t-3 t-4 t-5 t-6 t-7 t-8Start-up rate
Scotland
England
Wales-0.9
-0.6
-0.3
0.0
0.3
0.6
0.9
1.2
1.5
Imp
act
of
ne
w f
irm
form
atio
no
n e
mp
loym
en
t ch
ang
e
t t-1 t-2 t-3 t-4 t-5 t-6 t-7 t-8Start-up rate
Source: Mueller, van Stel and Storey (2008).
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 24
The effect of new business formation on regional employment in urban and rural in the Netherlands
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
0 1 2 3 4 5 6 7 8
Urban Rural
Source: Van Stel & Suddle (2008)
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 25
Regional differences I
Direct effect
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 26
Regional differences II
Indirect effects
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 27
Why Does the Effect of New Business Formation Differ Across Regions ? Estimation approach (Fritsch
& Schroeter, 2011)
Eit=0 / Eit-2 = a + b1 * average start-up rateit
+ b2 * average start-up rate2it
+ b3 * control variableit
+ b4 * control variableit * average start-up rateit
+ b5 * control variableit
+ b6 * control variableit * average start-up rateit
+ b7 * average start-up rate in adjacent regions it + u.
Pure cross-section regressions using regional average values.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 28
Marginal effect of start-ups on employment change -.
01
0.0
1.0
2
Marg
inal e
ffect of st
art
-up r
ate
5 6 7 8 9Start-up rate
Marginal effect of start-up rate 95% Confidence interval
Dependent variable: employment change
Marginal effect of start-up rate on employment change
Source: Fritsch & Schroeter (2011)
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 29
Marginal effect of start-ups on employment change with different levels of population density
-.005
0.0
05
.01
.015
.02
Marg
inal e
ffect
of st
art
-up r
ate
4 5 6 7Population density
Marginal effect of start-up rate 95% Confidence interval
Dependent variable: employment change
Marginal effect of start-up rate on employment change as the population density changes
Source: Fritsch & Schroeter (2011)
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 30
The Role of Local Market Conditions for the Indirect Employment Effects (Fritsch & Noseleit, 2013)
Results
The indirect employment effect of new business formation is more pronounced
in areas with relatively high population density than in less density regions.
in small business regions than in large business regions.
in regions characterized by a high concordance between the industry structures of start-ups and local incumbents than in regions where the correspondence of the industry structure of newcomers and incumbent firms is relatively low.
in small business regions where there is also high similarity between the industry structure of start-ups and incumbents than in large business regions with high similarity.
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 31
Speculations: Why are the indirect effects so much higher in agglomerations ?
Higher share of high quality start-ups in agglomerations because of
higher qualification of the workforce?
higher level of knowledge spillovers?
higher level of cultural, technological and economic creativity?
better supply of inputs?
…
Higher intensity of competition leading to higher quality of surviving start-ups and incumbents? − Could explain higher productivity and competitiveness of agglomerations.
Competition on input or on output markets?
Safeguard that competition works according to a survival of the fittest. Do not interfere with this kind of selection.
Focus on stimulating high quality start-ups.
A main part of the measures for stimulating high-quality new businesses should be region-specific.
A policy that aims at stimulating entrepreneurship needs a long-term perspective.
…
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 32
Policy Implications
Using other performance indicators than employment: GDP, productivity, innovation, …
Analyzing direct employment effects / fast growing firms (gazelles)
Identifying and analyzing the indirect effects of new business formation
The effect of entries of different quality
The role of new businesses for the generation and dissemination of innovation and knowledge (spin-offs)
Universities and other research institutions as incubators (entrepreneurial university)
The role of non-innovative entry
Developing and analyzing indicators for the formation of growth-relevant new businesses
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 33
Some avenues for further research
The role of the conditions on input and on output markets for the effects of new business formation on economic development
Effects of entry on competition in input markets and output markets
The role of the institutional environment
The role of regional characteristics
The role of the level of new business formation
The role of the economic development level/ effects of new business formation on economic development in developing countries
Entry as a cause or as a symptom of growth?
Longer-run effects of new business formation on regional development
Entrepreneurship policy (effectiveness, recommendations, etc.)Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 34
Some avenues for further research (continued)
35
Thank you for your attention !
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 36
The effect of new business formation on regional employment in US-MSAs (Acs & Mueller, 2008)
0.0
0.5
1.0
1.5
2.0
2.5
Impa
ct o
f ne
w b
usi
ness
fo
rmatio
no
n e
mp
loym
en
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
0.0
0.5
1.0
1.5
2.0
2.5
Impa
ct o
f ne
w b
usi
ness
fo
rmatio
no
n e
mp
loym
en
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
Source: Acs & Mueller (2008)
All start-ups
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 37
The effect of new business formation on regional employment in US-MSAs (Acs & Mueller, 2008)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Impa
ct o
f n
ew
bu
siness
fo
rmatio
non e
mplo
ymen
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Impa
ct o
f n
ew
bu
siness
fo
rmatio
non e
mplo
ymen
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
Source: Acs & Mueller (2008)
Small start-ups
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 38
The effect of new business formation on regional employment in US-MSAs (Acs & Mueller, 2008)
-7.0
-6.0
-50.
-4.0
-3.0
-2.0
-1.0
0.0
Impa
ct
of
ne
w b
usin
ess f
orm
ation
on e
mp
loym
en
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
-7.0
-6.0
-50.
-4.0
-3.0
-2.0
-1.0
0.0
Impa
ct
of
ne
w b
usin
ess f
orm
ation
on e
mp
loym
en
t ch
an
ge
t t-1 t-2 t-3 t-4 t-5 t-6Start-up rate
Source: Acs & Mueller (2008)
Large start-ups
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 39
Regression results for high and low population regions
High populated regions Low populated regions
Employment change
Independent variables
Total Incum-bents
New busi-nesses
Total Incum-bents
New busi-nesses
(I) (II) (III) (IV) (V) (VI)
Average sector-adjusted start-up rate (log), t-1
0.243*** 0.211*** 0.0323 0.164*** 0.100*** 0.0631* (0.0516) (0.0498) (0.0259) (0.0292) (0.0346) (0.0361)
Share of highly qualified 0.183*** 0.150*** 0.0336** 0.0296** 0.0221 0.00758 employees (log), t-1 (0.0264) (0.0255) (0.0133) (0.0134) (0.0173) (0.0110)
Population density (log), t-1
0.0357 0.0328 0.00292 -0.00085 -0.0103 0.00950
(0.0685) (0.0661) (0.0206) (0.0415) (0.0401) (0.0412)
Market potential (log), t-1 0.681* 0.101 0.580*** 1.298*** 1.159*** 0.139 (0.350) (0.338) (0.156) (0.301) (0.338) (0.250)
Constant -7.466* -0.498 -6.968*** -15.68*** -14.16*** -1.522 (4.973) (3.510) (1.992) (3.726) (4.213) (3.109)
Year dummies Yesa Yesa Yesa Yesa Yesa Yesa Control for industry structure
Yesa Yesa Yesa Yesa Yesa Yesa
R-squared (within) 0.72 0.635 0.666 0.843 0.728 0.571
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 40
Regression results for regions with high and low shares of small business employment
Small business regions Large business regions
Employment change
Independent variables
Total Incum-bents
New busi-nesses
Total Incum-bents
New busi-nesses
(I) (II) (III) (IV) (V) (VI)
Average sector-adjusted start-up rate (log), t-1
0.205*** (0.053)
0.198*** (0.043)
0.0317 (0.042)
0.189*** (0.047)
0.0991** (0.042)
0.0758** (0.030)
Share of highly qualified employees (log), t-1
0.0624*** 0.0347* 0.0295** 0.0767*** 0.0644 0.0132
(0.021) (0.018) (0.012) (0.022) (0.065) (0.012) Population density (log), t-1
0.0223 0.0452 0.00148 -0.0712 -0.0591 -0.0315
(0.074) (0.055) (0.055) (0.064) (0.068) (0.024) Market potential (log), t-1 0.611* -0.0309 0.309 0.495 0.168 0.241
(0.31) (0.24) (0.20) (0.38) (0.30) (0.23) Constant -6.980* -3.369 -3.611 -5.042 -1.493 -2.305
(3.67) (3.16) (2.46) (4.64) (3.65) (2.96)
Year dummies Yesa Yesa Yesa Yesa Yesa Yesa Control for industry structure
Yesa Yesa Yesa Yesa Yesa Yesa
R-squared (within) 0.84 0.73 0.65 0.71 0.62 0.60
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 41
Regression results for high and low correspondence of industry structure between entries and incumbents
High correspondence of
industry structure Low correspondence of industry
structure Employment
change
Independent variables
Total Incum-bents
New busi-nesses
Total Incum-bents
New busi-nesses
(I) (II) (III) (IV) (V) (VI)
Average sector-adjusted start-up rate (log), t-1
0.211*** 0.223*** -0.0114 0.171*** 0.115*** 0.0563
(0.051) (0.049) (0.025) (0.038) (0.034) (0.043) Share of highly qualified employees (log), t-1
0.121*** 0.123*** -0.00153 0.0529*** 0.0260* 0.0269*
(0.025) (0.024) (0.012) (0.019) (0.015) (0.013) Population density (log), t-1
0.0780 0.0912 -0.0132 -0.0452 -0.0304 -0.0148
(0.060) (0.059) (0.030) (0.067) (0.044) (0.064) Market potential (log), t-1 0.628 0.0811 0.547*** 1.085*** 0.773* 0.312
(0.42) (0.41) (0.21) (0.33) (0.40) (0.28) Constant -7.341 -0.583 -6.757*** -12.68*** -9.245* -3.439
(5.23) (5.08) (2.57) (4.14) (5.04) (3.52)
Year dummies Yesa Yesa Yesa Yesa Yesa Yesa Control for industry structure
Yesa Yesa Yesa Yesa Yesa Yesa
R-squared (within) 0.71 0.61 0.64 0.86 0.75 0.59
Fritsch: Entrepreneurship and Economic Development, 3rd KID Summer School, Nice, July 11, 2014 42
Small business regions with high correspondence of
industry structure between start-ups and incumbents
Small business regions with low correspondence of
industry structure between start-ups and incumbents
Employment change
Total Incum-bents
New busi-
nesses Total
Incum-bents
New busi-
nesses
Independent variables (I) (II) (III) (IV) (V) (VI)
Average sector-adjusted 0.349*** 0.344*** 0.00488 0.239* 0.185* 0.0287 start-up rate (log), t-1 (0.085) (0.083) (0.046) (0.13) (0.094) (0.10)
Share of highly qualified 0.0817* 0.0770 0.00471 0.0640** 0.0115 0.0552*** employees (log), t-1 (0.046) (0.047) (0.021) (0.024) (0.025) (0.019)
Population density 0.163** 0.189** -0.0266 0.0121 -0.0638 0.0157 (log), t-1 (0.072) (0.080) (0.033) (0.12) (0.054) (0.10)
Market potential (log), t-1 1.206** 0.924* 0.282 -0.191 -0.163 0.0457 (0.46) (0.47) (0.25) (0.71) (0.48) (0.50)
Constant -14.55** -11.27* -3.280 3.221 3.653 -0.432 (5.63) (5.89) (3.04) (8.74) (7.13) (6.17)
Year dummies Yesa Yesa Yesa Yesa Yesa Yesa Control for industry structure
Yesa Yesa Yesa Yesa Yesa Yesa
R-squared (within) 0.84 0.74 0.67 0.88 0.79 0.68 No. of regions/years 19/16 19/16 19/16 19/16 19/16 19/16
Regression results for small business regions
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