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In contrast to the widespread assumption in the field of entrepreneurship that “entrepreneurs are born”, the reality we experience is that environmental circumstances play a high role in explaining different levels of entrepreneurship across regions or countries. This article gives strong support for unemployment as key factor for entrepreneurship. An empirical lead forward was made by including data of all new firms created between 1993 and 2001 in 348 French labor market areas (2.8 million firms) into a multiple regression analysis. Our empirical study presents evidences about the effects of the local socio-economic environment on entrepreneurship. The results clearly show that geography matters for entrepreneurship. Three major determinants of entrepreneurship have been identified: 1) a high unemployment rate, 2) population growth, and 3) a highly qualified working population. Additionally, unemployment has been shown to affect entrepreneurship activity even more than population growth, i.e. increasing market demand.
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