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Does Local Business Ownership Insulate Cities from Economic Shocks?

In: Cities and Entrepreneurship

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  • Jed Kolko
  • David Neumark

Abstract

We assess a prominent argument for local economic policies that favor locally-owned businesses – namely, that locally-owned firms are more likely to internalize the costs to the community of decisions to reduce employment and hence help to insulate cities from adverse economic shocks. We test this argument by examining how establishment-level employment responses to economic shocks are affected by establishment ownership. We find evidence hat some types of local ownership do insulate regions from economic shocks, although the clearest benefits do not come from small, independent businesses, but instead from corporate headquarters and, to a lesser extent, from small, locally-owned chains.

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This chapter was published in:

  • Edward L. Glaeser & Stuart S. Rosenthal & William C. Strange, 2010. "Cities and Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number glae09-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 11893.

    Handle: RePEc:nbr:nberch:11893

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    Cited by:
    1. Anil Rupasingha, 2013. "Locally owned: Do local business ownership and size matter for local economic well-being?," Community and Economic Development Discussion Paper 2013-01, Federal Reserve Bank of Atlanta.
    2. Holger Breinlich & Gianmarco I. P. Ottaviano & Jonathan R. W. Temple, 2013. "Regional growth and regional decline," LSE Research Online Documents on Economics 51575, London School of Economics and Political Science, LSE Library.
    3. Cui, Jingbo & Qian, Hang, 2013. "The Effects of Exports on Facility Environmental Performance: Evidence from a Matching Approach," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 149550, Agricultural and Applied Economics Association.
    4. Jan Peter aus dem Moore & Alexandra Spitz-Oener, 2012. "Bye Bye, G.I. - The Impact of the U.S. Military Drawdown on Local German Labor Markets," SFB 649 Discussion Papers SFB649DP2012-024, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    5. André van Stel & Martin Carree & Emilio Congregado & Antonio Golpe, 2013. "Self-employment and Job Generation in Metropolitan Areas, 1969-2009," Scales Research Reports H201306, EIM Business and Policy Research.

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