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This paper examines the relationship between new firm formation and regional employment change in the Netherlands. Using a new regional data base for the period 1988-2002, the authors examine the time lags involved in the relationship. They also investigate whether the relationship differs by sector and by degree of urbanization. They find that the maximum effect of new businesses on regional development is reached after about six years. Their results also suggest that the overall employment impact of new-firm start-ups is positive but that the immediate employment effects may be small in the Netherlands.
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