State Policies Directly Affect Business Start-Ups, Closures, Study Says
WASHINGTON - Entrepreneurs make decisions about starting and closing businesses based not only on conditions in their current location, but on conditions in neighboring states. Those conditions can include bankruptcy exemptions, access to health insurance and unemployment programs, according to a new study for the SBA's Office of Advocacy. Some of the findings include that higher bankruptcy exemptions in neighboring states lower the probability of starting a business in the state of residence. Lower taxes in neighboring states increase the probability of business closures in adjoining higher tax states, the study found. Businesses in states with self-employment assistance programs, which encourage transition to entrepreneurship for the unemployed, are less likely to shut down. The study also revealed that individuals with access to employer provided health insurance are less likely to leave their jobs to start a business. The study, A Spatial Model of the Impact of State Bankruptcy Exemptions on Entrepreneurship, can be found on the SBA's Web site at http://www.sba.gov/advo/press/05-36.html.