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The Relationship Between The Establishment Age Distribution And Urban Growth

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  • R. Jason Faberman

Abstract

This paper presents new evidence on the relationship between a metropolitan area’s employment growth and its establishment age distribution. The author finds that cities with a relatively younger distribution of establishments tend to have higher growth, as well as higher job and establishment turnover. Geographic variations in the age distribution account for 38 percent of the geographic differences in growth, compared to the 32 percent accounted for by variations in industry composition. Differences are disproportionately accounted for by entrants and young (5 years or younger) establishments. Furthermore, the relationship between age and growth is robust to controls for urban diversity and education. Overall, the results support a microfoundations view of urban growth, where the benefits of agglomeration affect firms not through some production externality but through a process that determines which firms enter, exit, and thrive at a given location.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 51 (2011)
Issue (Month): 3 (08)
Pages: 450-470

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Handle: RePEc:bla:jregsc:v:51:y:2011:i:3:p:450-470

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Cited by:
  1. Zenou, Yves, 2009. "Endogenous job destruction and job matching in cities," Journal of Urban Economics, Elsevier, vol. 65(3), pages 323-336, May.
  2. Li, Dongya & Lu, Yi & Wu, Mingqin, 2012. "Industrial agglomeration and firm size: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 135-143.
  3. Stuart S. Rosenthal & William C. Strange, 2010. "Small Establishments/Big Effects: Agglomeration, Industrial Organization and Entrepreneurship," NBER Chapters, in: Agglomeration Economics, pages 277-302 National Bureau of Economic Research, Inc.
  4. Ghani, Ejaz & Kerr, William R. & O’Connell, Stephen D, 2011. "Who Creates Jobs?," World Bank - Economic Premise, The World Bank, issue 70, pages 1-7, November.
  5. Edward L. Glaeser & William R. Kerr & Giacomo A. M. Ponzetto, 2009. "Clusters of entrepreneurship," Economics Working Papers 1359, Department of Economics and Business, Universitat Pompeu Fabra.

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