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Please use this identifier to cite or link to this item: http://hdl.handle.net/2451/29481
Title: High-Technology Entrepreneurship in Silicon Valley Opportunities andOpportunity Costs
Authors: Fairlie, Robert W. - University of California, Santa Cruz
Chatterji, Aaron K. - Duke University
Issue Date: 2008
Series/Report no.: Net Institute Working Paper;08-04
Abstract: The economic expansion of the late 1990s undoubtedly created many opportunities for business creation in Silicon Valley, but the opportunity cost of starting a business was also high during this period because of the exceptionally tight labor market. A new measure of entrepreneurship derived from matching monthly files from the Current Population Survey (CPS) is used to provide the first test of the hypothesis that entrepreneurship rates were high in Silicon Valley during the 'Roaring 90s.' Unlike previous measures of firm births based on large, nationally representative datasets, the new measure captures business creation at the individual-owner level, includes both employer and non-employer business starts, and focuses on only hi-tech industries. Estimates from the matched CPS data indicate that hi-tech entrepreneurship rates were lower in Silicon Valley than the rest of the United States during the period from January 1996 to February 2000. Controlling for the large concentration of immigrants and highlyeducated workforce does not change the conclusion. Examining the post-boom period, we find that entrepreneurship rates in Silicon Valley increased from the late 1990s to the early 2000s. In contrast, trends in entrepreneurship rates in the United States were constant over this period. Although Silicon Valley may be an entrepreneurial location overall, the extremely tight labor market of the late 1990s, especially in hi-tech industries, may have suppressed business creation during this period.
URI: http://hdl.handle.net/2451/29481
Appears in Collections:NET Institute Working Papers Series

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