Economic Integration and New Firm Formation: Evidence from the United Kingdom and Ireland

JEL Classification L10 and R11

Andrew E. Burke

Department of Economics, Trinity College, Dublin 2, Ireland

Abstract

The paper examines the impact of economic integration on enterprise in a small open economy. The paper analyses large, small and total new company registrations in Ireland. It examines the impact of spill-overs from the United Kingdom labour market and product market on Irish firm formation. The study finds that negative labour market spill-overs dominate positive product market spill-overs so that a net negative effect results from Irish - British economic integration. The results indicate that enterprise in peripheral economies may be more vibrant if product market integration is introduced before labour market integration. The paper also finds enterprise to be positively affected by the number of university graduates in the labour force. House prices are found to

Acknowledgements

This paper has been funded by the Arts and Social Sciences Benefactions Fund, Trinity College Dublin. The author would like to thank his research assistant lan Minch, and Mike Harrison and Patrick Paul Walsh, as well as various seminar participants for useful comments. As usual, a disclaumer applies.