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Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?
Author(s) -
Glaeser Edward L.,
Kerr William R.
Publication year - 2009
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2009.00225.x
Subject(s) - endogeneity , demographics , distribution (mathematics) , economic geography , entrepreneurship , explanatory power , business , census , industrial organization , manufacturing , marketing , economics , econometrics , population , demography , mathematical analysis , philosophy , mathematics , finance , epistemology , sociology
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 60% and 80% of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns.