Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/31741 
Year of Publication: 
2008
Series/Report no.: 
Jena Economic Research Papers No. 2008,079
Publisher: 
Friedrich Schiller University Jena and Max Planck Institute of Economics, Jena
Abstract: 
This paper tests the importance of social contacts on entrepreneurship. To measure differences in the interconnectedness of social contacts, we compare rural and agglomerated areas. A smaller community size in rural areas generates greater network closure. Agents' neighborhoods are more likely to overlap, which intensifies social contacts and thus facilitates resource mobilization. Analyzing the impact of social contacts across regions, we find that greater network closure increases the likelihood of being an entrepreneur by 1.9 to 14.2 percentage points, depending on the number of underlying social contacts. These results remain robust after applying matching techniques and concentrating on young entrepreneurs.
Subjects: 
Occupational choice
entrepreneurship
social contacts
JEL: 
J24
Z13
Document Type: 
Working Paper

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