Effects of human capital and regional context on entrepreneurial survival
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Effects of human capital and regional context on entrepreneurial survival Begoña Cueto1 · Patricia Suárez2 · Matías Mayor1 Received: 12 April 2019 / Accepted: 11 September 2020 © Springer-Verlag GmbH Germany, part of Springer Nature 2020
Abstract The aim of this paper is to analyse self-employment survival, with special interest in the role of human capital and regions. Using Spanish administrative data and multilevel models, we followed two cohorts of new entrepreneurs for 2 years. According to our findings, the survival rate of new entrants into self-employment is approximately 53%, with this rate decreasing during the economic downturn by ten points. The results for both cohorts underline the necessity of considering personal and contextual factors in elaborating policy recommendations on entrepreneurship. Young workers and those with lower levels of informal human capital have low survival rates, so they need stronger support. The estimations also offer evidence of the relevance of regions. The inherent characteristics of regions contribute to explaining the survival of new start-ups. Again, the design of entrepreneurial policies should take into account these results. Additionally, the reason for entering self-employment seems to be more relevant in times of crisis. JEL Classification J21
1 Introduction Policies promoting entrepreneurship are among the most commonly used measures to combat unemployment. Increasing the number of businesses may help reduce unemployment figures not only directly but also indirectly through the creation of * Begoña Cueto [email protected] Patricia Suárez [email protected] Matías Mayor [email protected] 1
Department of Applied Economics, University of Oviedo, Avda. Del Cristo s/n, 33006 Oviedo, Spain
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Department of Economics, University of Oviedo, Avda. Del Cristo s/n, 33006 Oviedo, Spain
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additional jobs in new start-ups. In this regard, the Entrepreneurship 2020 Action Plan in the European Union states that more entrepreneurs are needed to increase growth and employment. Entrepreneurship policies often include programmes to encourage entry into self-employment. However, new-firm survival is difficult, with high exit rates during the early stages of the launch of a new enterprise. For example, German data reported by Fritsch et al. (2006) show that approximately 50% of new businesses do not survive more than 5 years. During the economic downturn, the Spanish unemployment rate increased from 8.2% in 2007 to a maximum of 26.1% in 2013. A number of policies have been launched to combat unemployment, and programmes to promote self-employment are among the most common. According to Eurostat, expenditure on start-up incentives increased from 0.091% of GDP in 2008 to 0.113% in 2010 (from 1017.256 to 1225.409 million euro). In this regard, while expenditure on training and employment incentives was drastically reduced, the amount dedicated to supporting selfemployment increased.1 For instance, in February 2013, the Spanish gover
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