Entrepreneurship, start-up costs and employment
Pissarides, Christopher A.
SourceEuropean Economic Review
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We study the effects of business start-up costs on employment, in a model with managers, workers and matching. We show that higher start-up costs discourage entrepreneurs and increase the fraction of the population who become workers. Job creation suffers and employment settles at a lower level. We illustrate with evidence from major OECD economies, where large variations in start-up costs are correlated with large variations in employment levels. © 2001 Elsevier Science B. V. All rights reserved.