ABSTRACT
This chapter presents one of the first empirical attempts to investigate the influence of local entrepreneurial social capital on start-up propensity. It focuses on the local government level. The chapter explains a labour market area approach would also mean merging urban and rural municipalities, which would hinder the analysis of possible urban-rural differences. It describes the empirical analysis of the impact of social capital and control variables on start-ups. Earlier spatial—empirical explanations of new firm formation in Sweden indicate that municipalities that are centres of regional labour markets exhibit somewhat different determinants of start-up rates. The chapter utilises the classical way to deal with possible endogeneity by using measures of the independent variables that are earlier in time than the measures of the dependent variables. It also presents data and methods and a first test of the social capital measures.
