REGIONAL DIFFERENCES IN NEW FIRM FORMATION - EVIDENCE FROM WEST-GERMANY

The paper presents results of an empirical investigation into regional differences in the formation of new firms in West Germany. Some of the findings are quite consistent with the results of similar analyses undertaken for other countries. There is a large positive correlation between the rate at which new firms are founded and the share of the regional labour force that is employed in small companies. Many founders seem to have had experience working in small firms and seem to have developed an above-average level of skill. A high unemployment rate does not promote a rise in the formation of new firms in West Germany. On the contrary, a regional environment conducive to start-ups is characterized by low unemployment, high earnings and a well-trained labour force.