The relationship between R&D knowledge spillovers and employment entry

Recent approaches to entrepreneurship seek to explain regional heterogeneity by exploring the link between knowledge endowment and new firm creation. There are two main gaps in this stream of research. First, entrepreneurship tends to be considered in terms of entry rates rather than in terms of job creation. Second, most empirical studies focus on relatively large geographical areas and overlook the distance at which knowledge externalities dissipate. The present paper exploits data on firms based in the Emilia-Romagna region (Italy) to show that private R&D spillovers are positively associated with the size at entry of innovative firms only for those located close to the R&D activities and that these spillovers dissipate at a few kilometres from the R&D source. Non-linearities are detected only for low-tech sectors.