Do universities affect firms’ location decisions? Evidence from Spain

Abstract

Human capital, scientific research, and technology are the three chief\nmechanisms promoting knowledge spillovers from universities to firms. Based on a study\nof the impact of Spain�s 1983 University Reform Act (LRU), which opened the door to the\nfoundation of new universities and faculties, this paper examines whether university (or\nfaculty) location affects the creation of new firms within a given province. We conclude\nthat the foundation of science and social science faculties has had a marked impact on the\ncreation of firms.