Regional Path-Dependence in Start-up Activity

This paper studies the impact of an existing industrial structure in a region on the number of start-ups in this region. The aim is to detect path-dependencies in the regional industry structure. To this end we study empirically the regional factors that influence start-up rates. The approach deviates from the huge literature on start-up rates by studying each 2-digit industry separately, including the employment in other industries into the analysis and distinguishing between factors that provide founders and factors that influence their likelihood to start a firm.