Demographic change, new business formation and spatial concentration of population

Abstract

This paper investigates the role of urbanization in the relation between population change and new business formation. The hypothesis of research is that population change significantly influences new business formation only in regions at lower urbanization. This hypothesis is based on the idea that local demand and growing population are significant determinants of new business formation only for rural regions. Using Italian data, we find evidence in support of this hypothesis. Moreover, we find that evidence of spatial dependence in the relation between population change, new business formation and urbanization.