Entrepreneurship and urban growth
Subtitle: an empirical assessment with historical mines
By: Edward L. Glaeser, Sari Pekkala Kerr, William R. Kerr
Contributors: Kerr, Sari Pekkala; Kerr, William R. (William Robert); Harvard Business School
Series: Working paper / Harvard Business School -- 13-015; Working paper (Harvard Business School) -- 13-015.
Publisher: Harvard Business School
Published: 2012
Place of publication: [Boston]
Language: eng
Number of pages: 34
Subjects: Cities and towns; Growth; Econometric models; Entrepreneurship; Urban economics
Description: Measures of entrepreneurship, such as average establishment size and the prevalence of start-ups, correlate strongly with employment growth across and within metropolitan areas, but the endogeneity of these measures bedevils interpretation. Chinitz (1961) hypothesized that coal mines near Pittsburgh led that city to specialization in industries, like steel, with significant scale economies and that those big firms led to a dearth of entrepreneurial human capital across several generations. We test this idea by looking at the spatial location of past mines across the United States: proximity to historical mining deposits is associated with bigger firms and fewer start-ups in the middle of the 20th century. We use mines as an instrument for our entrepreneurship measures and find a persistent link between entrepreneurship and city employment growth; this connection works primarily through lower employment growth of start-ups in cities that are closer to mines. These effects hold in cold and warm regions alike and in industries that are not directly related to mining, such as trade, finance and services. We use quantile instrumental variable regression techniques and identify mostly homogeneous effects throughout the conditional city growth distribution.
Notes: "August 2012" -- Publisher's website.

Includes bibliographical references.