January 2022
Article
Journal of Financial Economics

Who Creates New Firms When Local Opportunities Arise?

By: Shai Benjamin Bernstein, Emanuele Colonnelli, Davide Malacrino and Timothy McQuade

Format:Print

Abstract

We examine the characteristics of the individuals who become entrepreneurs when local opportunities arise. We identify local demand shocks by linking fluctuations in global commodity prices to municipality level agricultural endowments in Brazil. We find that the firm creation response is almost entirely driven by young and skilled individuals. Their response is larger in municipalities with better access to finance and more skilled human capital, and is driven entirely by the formal market. These results highlight how the composition of the local population can have a significant impact on the entrepreneurial responsiveness of the economy.

Keywords

Firms; Entrepreneurs; Demand Shocks; Entrepreneurship; Personal Characteristics; Demographics; Opportunities; Brazil

Citation

Bernstein, Shai Benjamin, Emanuele Colonnelli, Davide Malacrino, and Timothy McQuade. "Who Creates New Firms When Local Opportunities Arise?" Journal of Financial Economics 143, no. 1 (January 2022): 107–130.