Dynamic Clusters

Globalization has had an enormous impact on traditional industrial structures. It seems almost the case that everything is everywhere the same. And yet, in reality, some regions in a single industrialized country enjoy rapid economic growth while others are downsizing or stagnating. Thus there must be some remaining regional competitive advantages—even in the “Age of Globalization.” This paper engages in a quest to discover what these new “locational” factors might be and how and why they are necessary in creating a dynamic cluster of regional growth. In doing so, we try to link agglomeration advantages of the new economic geography with competitive advantages of Porter’s cluster theory. But we also go beyond these approaches and add further regional growth factors such as creativity or diversity. Using data that paint a comprehensive picture of industry and regional development in Germany we try to find empirical evidence for our approach. A case study from the automobile industry – one of the leading industries in Germany – completes our picture of dynamic clusters.Cluster, Regional Growth, Innovation, Creativity

Forced Migration and the Effects of an Integration Policy in Post-WWII Germany.

After World War II, about 8 million ethnic Germans — so called expellees — were forced to leave their homelands and settle within the new borders of West Germany. Subsequently, a law (Federal Expellee Law) was introduced to foster their labor market integration. We evaluate this law by comparing the employment situation between expellees and groups of West Germans and GDR refugees over time. We define our comparison groups to uncover even small effects of the law. Still, we find no evidence that the law met its goal to foster the expellees’ labor market integration

The Long Wind of Change. Educational Impacts on Entrepreneurial Intentions

In this paper, we assess educational factors which might have an impact on entrepreneurship. We analyze influences on the entrepreneurial intentions of German university students and find that pre-university education significantly affects their desire to become an entrepreneur. Using the recent German history of separation and reunification as quasi-natural experiment, we focus on the early formation of entrepreneurial endowments during adolescence and investigate whether pre-university education affects university students’ entrepreneurial intentions. Particularly, we analyze the impact of socialization and schooling under the socialist regime of the former German Democratic Republic (GDR) which might hamper entrepreneurship. Our results show that socialist education has a negative effect on the entrepreneurial intentions of students in reunified Germany who were brought up in the GDR. When analyzing the subsample of East German students who were partly educated in the FRG after reunification in 1990, we find that some years of education in the liberal market system increase the entrepreneurial intentions of students born in the GDR. We focus on university students, since universities are seen as potential “breeding ground†for innovative entrepreneurship as described by Schumpeter (1912). Here we assume according to Falck et al. (2009) that entrepreneurial intentions are a good predictor for future entrepreneurship. We use data from a regularly repeated survey among university students in Germany. Our analysis rests on the three waves conducted after reunification at 23 universities, in (the former socialist) East as well as in West Germany. Generally, German students have significantly lower entrepreneurial intentions when they were educated in the GDR. We further restrict our sample to mobile students at West German universities and still find a negative effect of socialist education. This effect is also robust to the inclusion of a rich set of control variables concerning the students’ family background, job experience as well as further measures for their educational training. Overall, being educated in the socialist GDR decreases the likelihood of having entrepreneurial intentions between around 4 and 7 percentage points Thus our findings suggest that adolescents’ education might act as effective measure to stimulate entrepreneurship.

Eigenverantwortliche Individuen und Pro-Aktive Unternehmen

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Arbeitszeitflexibilisierung revisited

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Demography and Innovative Entrepreneurship

Demographic change will be one of the major challenges for economic policy in the developed world in the next decades. In this article, we analyze the relationship between age structure and the number of startups. We argue that an individual’s decision to start a business is determined by his or her age and, therefore, that a change in a region’s age distribution affects the expected number of startups in the region. Using German regional data, we estimate a count-data model and find that the expected number of startups is positively influenced by the fraction of individuals of working age—20–64 years old. A more detailed analysis of the working-age distribution suggests that startups in knowledge-based (high-tech) manufacturing industries are affected by changes in this distribution whereas firms in other industries are not. In particular, increases in the fraction of individuals in the 20–30 age range and individuals in the 40–50 age range have a positive effect on the number of high-tech startups.demography, age distribution, entrepreneurship, innovation, region

Identity and Entrepreneurship

We incorporate the concept of social identity into a stylized model of occupational choice and analyze whether an individual’s identity affects his or her decision to become an entrepreneur. We argue that an entrepreneurial identity results from an individual’s socialization. This could be parental influence but, as argued in this paper, also peer influence. To test this empirically, we apply instrumental variable approaches to PISA data. Our findings suggest that having an entrepreneurial peer group has a positive effect on an individual’s entrepreneurial intentions. Regarding entrepreneurial parents, we find a positive effect that cannot only be explained by ownership succession of the family business.occupational choice, entrepreneurship, identity, peer effects

The Phantom of the Opera: Cultural Amenities, Human Capital, and Regional Economic Growth

We analyze the extent to which endogenous cultural amenities affect the spatial equilibrium share of high-human-capital employees. To overcome endogeneity, we draw on a quasi-natural experiment in German history and exploit the exogenous spatial distribution of baroque opera houses built as a part of rulers' competition for prestigious cultural amenities. Robustness tests confirm our strategy and strengthen the finding that proximity to a baroque opera house significantly affects the spatial equilibrium share of high-human-capital employees. Then, a cross-region growth regression shows that these employees induce local knowledge spillovers and shift a location to a higher growth path.cultural amenities, regional economic growth, human capital, Bohemians

The Extension of Clusters: Difference-in-Differences Evidence from the Bavarian State-Wide Cluster Policy

If one cluster increases local competitiveness, can politicians, by interlinking clusters, achieve an even better effect at the state level? To answer this question, the paper analyzes the “Cluster Initiative” introduced in 1999 by the Bavarian State Government. The purpose of the initiative was to create a Bavarian-wide innovation network in support of state-wide knowledge flows. Using a difference-in-differences approach, we find that introducing the Bavarian-wide cluster policy increased the likelihood of innovation by a firm in the targeted industry by 4 to 7 percentage points. However, this effect is mainly driven by large firms’ increased likelihood to innovate.difference-in-differences, cluster policy, regional policy

The Apple doesn't Fall far from the Tree: Location of Start-Ups Relative to Incumbents

New firm location decisions, relative to incumbents may be based on a choice between two types of advantages: natural advantages or those that arise from social embeddedness, the latter of which may particularly include knowledge spillovers. We analyze the relative importance of geographically bounded location factors based on data from 103 manufacturing industries across 327 West German and 111 East German districts. Our micro-geographic analysis reveals that the two parts of the country vary in their pattern of new firm location. In East Germany, only 5 percent of the industries reveal start-up localization patterns beyond what natural advantages would suggest compared to 40 percent in West Germany.entrepreneurship, location decision, natural advantages, local knowledge spillovers