50th Congress of the European Regional Science Association: "Sustainable Regional Growth and Development in the Creative Knowledge Economy", 19-23 August 2010, Jönköping, Sweden
The presence of universities in a region has been found to be an important factor for regional economic growth. In search for the specific explanations of this phenomenon, the connection between universities and locally based entrepreneurship has attracted considerable attention. We investigate how universities may affect regional entrepreneurship through the localisation decisions of entrepreneurial alumni. Empirically, we use data on the background of all 35 187 young individuals who founded start-up firms in Sweden in the period 2003-2005, a third of whom attended a university, to estimate whether the choice of where to pursue tertiary education studies had significant impact on the location of their firm. Our results suggest that even when controlling for the spatial history of the individual founder, individuals have an increased propensity to set up in the region where they studied. This effect is found to substitute for both urbanisation economies and localisation economies as drivers of regional-level entrepreneurship. Thus, our analysis provides evidence on how universities affect regional economic development that complements the strong focus on spin-off activities by university researchers in previous studies.