Working Paper: CEPR ID: DP3678
Authors: David B. Audretsch; Max Keilbach
Abstract: The neoclassical model of the production function, as applied by RobertSolow to build the neoclassical model of growth, linked labour andcapital to output. More recently, Romer and others have expanded themodel to include measures of knowledge capital. In this Paper weintroduce a new factor, entrepreneurship capital, and link it to outputin the context of a production function model. This Paper explains whatis meant by entrepreneurship capital and why it should influenceeconomic output. A production function model including several differentmeasures of entrepreneurship capital is then estimated for Germanregions. The results indicate that entrepreneurship capital is asignificant and important factor shaping output and productivity. Theseresults suggest a new direction for policy that focuses on instrumentsto enhance entrepreneurship capital.
Keywords: entrepreneurship capital; production function; regional economic performance
JEL Codes: M13; O32; O47
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Entrepreneurship capital (L26) | Economic output (E23) |
| Higher entrepreneurship capital (P12) | Higher output and productivity (E23) |
| Specific types of entrepreneurship capital (L26) | Improved economic performance (O49) |
| Entrepreneurship capital (L26) | Knowledge spillovers (O36) |
| Entrepreneurship capital (L26) | Increased competition (L13) |
| Entrepreneurship capital (L26) | Enhanced diversity among firms (L25) |