UNU-MERIT Working Papers Series

New firm creation and failure: A matching approach

Thomas Gries, Stefan Jungblut & Wim Naudé #2012-015

We propose that the rate of creation and failure of new firm start-ups can be modelled as a search and matching process, as in labor market matching models. Deriving a novel Entrepreneurship-Beveridge curve, we show that a successful start-up depends on the efficiency with which entrepreneurial ability is matched with business opportunity, and outline a number of possible applications of this matching approach to formalize the economics of entrepreneurship.

JEL classifications: L26, M13,O10, O14

Keywords: Entrepreneurship, start-ups, labor market matching

Download the working paper (PDF)