Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/167469
Authors: 
Di Addario, Sabrina
Vuri, Daniela
Year of Publication: 
2010
Series/Report no.: 
CESifo Working Paper 3145
Abstract: 
We analyse empirically the effects of urbanization on Italian college graduates’ work possibilities as entrepreneurs three years after graduation. We find that doubling the province of work’s population density reduces the chances of being an entrepreneur by 2-3 percentage points. This result holds after controlling for regional fixed effects and is robust to instrumenting urbanization. Provinces’ competition, urban amenities and dis-amenities, cost of labour, earning differentials between employees and self-employed workers, unemployment rates and value added per capita account for more than half of the negative urbanization penalty. Our result cannot be explained by the presence of negative differentials in returns to entrepreneurship between the most and the least densely populated areas either. In fact, as long as they succeed in entering the most densely populated markets, young entrepreneurs are able to reap-off the benefits of urbanization externalities: the elasticity of entrepreneurs’ net monthly earnings with respect to population density is 0.02-0.03.
Subjects: 
labor market transitions
urbanization
JEL: 
J21
J24
R12
Document Type: 
Working Paper

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