New article: The sources of regional variation in Canadian self-employment

I just got the final version of my new paper in the International Journal of Entrepreneurship and Small Business (Vol 15, issue 3, pages 340-361 for those keeping track at home. E-mail me for a copy). This is my first solo paper and the first paper that I controlled from start to finish. It’s not directly related to my dissertation, but rather an outcome of what I saw as a gap in the literature: the lack of any research on what regional economic and social factors are associated with local levels of entrepreneurship and self employment. There is research on this topic from dozens of countries, but none yet in Canada.

I wanted to highlight two tables from the paper. The first was part of the lit review. Like I said, there have been dozens of papers since the 1980s that have examined the regional causes of entrepreneurial activity. Normally these are regressions based on census or tax data on a metropolitan level, but some of the more advanced work employ high level statistical approaches to giant, micro-level datasets. But, there has yet to be a serious attempt to synthesize this research. The challenge is that these papers employ a variety of datasets and examine a variety of countries at a variety of times, making it difficult to really compare. But after many, many hours spent reading articles and working with spreadsheets, I was able to create this table:

Significant findings of past research on regional entrepreneurial determinates

Significant findings of past research on regional entrepreneurial determinates

The big takeaway from this table is (1) it’s easy to see that things that proxy economic growth, like population growth, and the presence of other startups, are generally constantly associated with higher levels of entrepreneurial activities. We also see interesting differences between countries. Personal wealth has almost no effect on German entrepreneurship, but it is shows to cause it in countries like Sweden and the US. It’s a difficult task to tease out if this is more related to differing national economies, or due to the different statistics and methods used by the various papers.

The second table are the results from Canada.
Regression results of non-agricultural self-employment in Canadian census metropolitan areas

I argue in this paper that Canadian self-employment appears to be mostly driven by local economic growth. Population growth, a fairly good proxy for economic growth (people aren’t moving to Fort MacMurray for the culture) has a positive effect and unemployment has a negative effect. Nothing too surprising there. Barriers to entry are important too, economies dominated by a few large employers have less entrepreneurship than those with a pre-existing base of small businesses. Most surprising was the role of taxes, I found that areas with higher commercial-to-residential tax ratios had higher rates of self-employment than other regions. I don’t know what to make of this last finding: it’ll take some more work to figure out if this is a real issue or just a statistical artifact.

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