Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market

Dulleck, Uwe; Frijters, Paul; Winter-Ebmer, Rudolf

doi:10.2139/ssrn.470462

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Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market

23 Pages Posted: 4 Dec 2003

See all articles by Uwe Dulleck

Uwe Dulleck

University of Vienna - Department of Economics

Paul Frijters

Queensland University of Technology - School of Economics and Finance

Johannes Kepler University Linz - Department of Economics; Institute for Advanced Studies (IHS) - Department of Economics & Finance; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

There are 2 versions of this paper

Date Written: November 2003

Abstract

Starting a firm with expansive potential is an option for educated and high-skilled workers. This option serves as an insurance against unemployment caused by labor market frictions and hence increases the incentives for education. We show within a matching model that reducing the start-up costs for new firms results in higher take-up rates of education. It also leads, through a thick-market externality, to higher rates of job creation for high-skilled labor as well as average match productivity. We provide empirical evidence to support our argument.

Keywords: matching, education, start-up costs, venture capital, bureaucratic hurdles

JEL Classification: J24, D73, J68

Suggested Citation: Suggested Citation

Dulleck, Uwe and Frijters, Paul and Winter-Ebmer, Rudolf, Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market (November 2003). Available at SSRN: https://ssrn.com/abstract=470462 or http://dx.doi.org/10.2139/ssrn.470462