Who Creates New Firms When Local Opportunities Arise?

73 Pages Posted: 21 Mar 2018 Last revised: 30 Dec 2020

See all articles by Shai Bernstein

Shai Bernstein

Harvard Business School

Emanuele Colonnelli

University of Chicago - Booth School of Business

Davide Malacrino

International Monetary Fund

Timothy McQuade

Stanford University

Date Written: December 29, 2020

Abstract

We examine the characteristics of the individuals who become entrepreneurs when local opportunities arise. We identify local demand shocks by linking fluctuations in global commodity prices to municipality-level agricultural endowments in Brazil. We find that the firm creation response is mostly driven by young and skilled individuals. The characteristics of these responsive entrepreneurs are significantly different from those of average entrepreneurs in the economy. By structurally estimating a novel two-sector model of a local economy, we highlight how the demographic composition of the local population can significantly affect the entrepreneurial responsiveness of the economy.

Suggested Citation

Bernstein, Shai and Colonnelli, Emanuele and Malacrino, Davide and McQuade, Timothy, Who Creates New Firms When Local Opportunities Arise? (December 29, 2020). Available at SSRN: https://ssrn.com/abstract=3143190 or http://dx.doi.org/10.2139/ssrn.3143190

Shai Bernstein

Harvard Business School ( email )

Boston, MA 02163
United States

Emanuele Colonnelli (Contact Author)

University of Chicago - Booth School of Business ( email )

HOME PAGE: http://emanuelecolonnelli.com

Davide Malacrino

International Monetary Fund ( email )

700 19th St NW
Washington, DC 20001
United States

Timothy McQuade

Stanford University ( email )

Stanford, CA 94305
United States

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