Urbanisation, concentration and diversification as determinants of firm births and deaths

Abstract

This paper examines the impact of urbanisation, concentration and diversification on firm births and firm deaths across European regions while uniquely accounting for the role of firm interrelationships, regional factors and national fixed effects. A 3SLS model on firm births and deaths is estimated across 196 regions and 16 European countries from 2008 to 2017. We find that density positively influences firm births and negatively influences firm deaths. Related variety positively impacts firm deaths and negatively affects firm births. Significant national variations are also observed. Multiplier effects are identified within and across regions as firm births positively influence future firm births and negatively influence future firm deaths.