Working Paper: NBER ID: w14407
Authors: Edward L. Glaeser; William R. Kerr
Abstract: Why are some places more entrepreneurial than others? We use Census Bureau data to study local determinants of manufacturing startups across cities and industries. Demographics have limited explanatory power. Overall levels of local customers and suppliers are only modestly important, but new entrants seem particularly drawn to areas with many smaller suppliers, as suggested by Chinitz (1961). Abundant workers in relevant occupations also strongly predict entry. These forces plus city and industry fixed effects explain between sixty and eighty percent of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns
Keywords: Entrepreneurship; Local Conditions; Industrial Structure; Manufacturing; Spatial Distribution
JEL Codes: J20; L10; L20; L60; O30; R20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| presence of small suppliers (L81) | disparities in entrepreneurship between cities (R12) |
| presence of small suppliers (L81) | rates of new manufacturing firms (M13) |
| concentration of workers in relevant occupations (J69) | entry rates of new firms (L26) |