Self-employment and entrepreneurship in urban and rural labour markets ☆

By G. Faggio, Olmo Silva. 2014

174 citations recorded by the source corpus.

We study the link between self-employment and some salient aspects of entrepreneurship – namely business creation and innovation – in urban and rural labour markets. In order to do so, we combine individual and firm-level data for Britain aggregated at the Travel-to-Work Area level. We find that a higher incidence of self-employment positively and strongly correlates with business creation and innovation in urban areas, but not in rural areas. We also document that more rural than urban workers become self-employed in areas with comparably poor labour market opportunities, although this heterogeneity is not evident when focussing on entrepreneurship. Finally, we show that the misalignment between self-employment and our proxies for entrepreneurship in rural areas disappears once we account for local labour market conditions. Our results suggest that self-employment, business creation and innovation are well lined-up in urban areas because they capture the same economic phenomenon – namely, genuine entrepreneurship. This is not the case for rural areas.

Subfields: Economics and Econometrics, Management of Technology and Innovation, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/c6fa8f59c5c1450b5a7a5d0ea57379854d7b6e1e

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In Management of Technology and Innovation

  1. Antoine Habersetzer
  2. H. Mayer
  3. Rahel Meili

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