Entrepreneurship,start-up costs and employment |
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| Institution: | 1. School of Management, University of Bath, Bath BA2 7AY, United Kingdom;2. Department of Managerial Economics, Strategy and Innovation Katholieke Universiteit Leuven, Leuven, Belgium;3. Department of Strategic Management and Globalization Copenhagen Business School, Kilevej 14A, Frederiksberg 2000, Denmark |
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| Abstract: | We study the effects of business start-up costs on employment, in a model with managers, workers and matching. We show that higher start-up costs discourage entrepreneurs and increase the fraction of the population who become workers. Job creation suffers and employment settles at a lower level. We illustrate with evidence from major OECD economies, where large variations in start-up costs are correlated with large variations in employment levels. |
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