Variations in new firm formation rates: Analysis across New Zealand regions

Abstract

This dissertation investigates how regional characteristics affect new firm formation rates in 12 major labour market areas across New Zealand. Following from a series of studies across advanced market economies, panel data analysis with fixed and random-effects modelling is utilised to determine how a variety of regional factors such as unemployment, average household income and average firm size affect firm birth rates across 3 industry sectors: Manufacturing/building, service and retail/commercial trade. Results for New Zealand indicate that in general, firms are more likely to start up in regions with better access to unskilled labour, higher population density, higher population growth and a lower proportion of individuals with higher level qualifications.