Ruhr Economic Papers

Ruhr Economic Papers #787

Immigration and New Firm Formation – Evidence from a Quasi-experimental Setting in Germany

by Vera Jahn and Max Friedrich Steinhardt

RUB, 12/2018, 28 S./p., 8 Euro, ISBN 978-3-86788-915-5 DOI: 10.4419/86788915

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Abstract

This paper analyzes in how far immigration affects firm formation at the regional
level. For this purpose, we exploit a placement policy in Germany in the 1990s for
immigrants of German origin from Eastern Europe and the former Soviet Union. Our
panel regressions suggest that immigration had a positive impact on regional firm
formation. The most likely mechanisms driving this result are labor supply-side effects
and positive implications of cultural diversity. Overall, our paper demonstrates that
immigration induced changes in local labor supply can partially be absorbed by the
creation of firms.

JEL-Classification: F22, L26, R11

Keywords: Immigration; placement policy; economic impact; firms

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