Figure 1.
The diagram shows how labour market regulation by local governments acts as a signaller and produces two signals that workers are more protected and that local governments comply with the law. These signals reach incumbent enterprises, workers for manufacturing start ups, manufacturing entrepreneurs, and banks. Incumbent enterprises in manufacturing and non manufacturing strictly follow the law and gain reputation in the labour market. Workers for start ups provide labour and support entrepreneurship. Manufacturing entrepreneurs are divided into realistic entrepreneurs who continue and potential entrepreneurs who start or exit. Banks and funds provide finance. These processes lead to a rise in manufacturing entrepreneurship. A I substitutes for labour, workers innovate, and banks provide funds. Digitisation drives manufacturing start ups and reduces costs, with workers striving to digitise. A I drives manufacturing start ups and raises A I innovation. Manufacturing digitisation increases. All elements contribute to an overall rise in the manufacturing entrepreneurship level.Mechanisms by which labor market regulation affects manufacturing entrepreneurship
Source: Author’s own creation