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

Author(s): Uwe Dulleck, Paul Frijters and Rudolf Winter-Ebmer

Publication Date: January 2004

Keyword(s): education, matching, start-up costs and venture capital

Programme Area(s): Labour Economics

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 labour 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 labour as well as average match productivity. We provide empirical evidence to support our argument.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4172

Bibliographic Reference

Dulleck, U, Frijters, P and Winter-Ebmer, R. 2004. 'Reducing Start-Up Costs for New Firms: The Double Dividend on the Labour Market'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=4172