Welfare effects of new firm formation

This paper utilizes tax data to present the welfare effects of new ventures in Germany. Cohort analysis is applied to investigate survival of start-up firms, turnover, input, value added, and employment effects. Most drop-outs occur in the early stages of the firms. One Euro of turnover induces considerable indirect effects because 66 Cents are used to buy products and services from incumbents, while 34 Cent remain in the firm. Sectoral differences can also be observed. The manufacturing industry, especially its innovative parts, generates the highest value added and reveals highest expenses for inputs in the medium term.

Schneck, S.; May-Strobl, E. (2013): Wohlstandseffekte des Gründungsgeschehens, in: Institut für Mittelstandsforschung Bonn (Hrsg.): IfM-Materialien Nr. 223, Bonn.

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