Potential Entrepreneurship in Japan

The aim of this paper is to investigate the potential for entrepreneurship in Japan using the Employment Status Survey, which is the only government-administered survey that includes questions about the desire to become an entrepreneur. We find that there are still a number of potential entrepreneurs in Japan, despite a recent decline in the number of new firms being established. We also find that there is a large regional variation in the distribution of entrepreneurial potential, with clustering into a few regions and the level in Tokyo being exceptional. Further, using panel data on 47 prefectures from 1982 to 1997, we examine the determinants of entrepreneurial potential. The estimation results show that the price-cost margin, market size, market growth and the unemployment rate have positive effects on the potential for entrepreneurship.