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The Geographic Concentration of New Firm Formation and Human Capital: Evidence from the Cities

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Author Info

  • Zoltan J Acs
  • Catherine Armington

Abstract

The role of education and human capital externalities is a key variable in theories of economic growth. However, the mechanism by which these externalities are realized has not been fully investigated. We examine the relationship between area differences in the levels of human capital and subsequent differences in new firm start-up rates. Firm start-ups are usually based on an innovation (in product, process, or market) that derives from utilization of new knowledge. We find that the new firm start-up rates in areas that function as integrated labor and consumer markets (city plus surrounding commuter area) are (1) positively related to the share of adults with college degrees, and also (2) positively related to higher levels of existing establishments in the same industry and area sector. The finding that higher concentrations of existing establishments in the same industry segment were strongly associated with higher startup rates suggests that spillover of relevant knowledge from other local business owners/managers and researchers within each industry contributes to greater innovation and growth in the area.

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Bibliographic Info

Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 03-05.

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Date of creation: Feb 2003
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Handle: RePEc:cen:wpaper:03-05

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Keywords: CES; economic; research; micro; data; microdata; chief; economist;

References

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  1. Audretsch, David B., 1995. "Innovation, growth and survival," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 441-457, December.
  2. Geroski, P. A., 1995. "What do we know about entry?," International Journal of Industrial Organization, Elsevier, vol. 13(4), pages 421-440, December.
  3. Lazear, Edward, 2003. "Entrepreneurship," IZA Discussion Papers 760, Institute for the Study of Labor (IZA).
  4. Catherine Armington & Zoltan Acs, 2002. "The Determinants of Regional Variation in New Firm Formation," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 33-45.
  5. Edward P. Lazear, 2005. "Entrepreneurship," Journal of Labor Economics, University of Chicago Press, vol. 23(4), pages 649-680, October.
  6. Antonio Ciccone & Robert E. Hall, 1993. "Productivity and the Density of Economic Activity," NBER Working Papers 4313, National Bureau of Economic Research, Inc.
  7. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  8. James E. Rauch, 1991. "Productivity Gains From Geographic Concentration of human Capital: Evidence From the Cities," NBER Working Papers 3905, National Bureau of Economic Research, Inc.
  9. Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
    • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
  10. Alan B. Krueger & Jorn-Steffen Pischke, 1997. "Observations and Conjectures on the U.S. Employment Miracle," NBER Working Papers 6146, National Bureau of Economic Research, Inc.
  11. Glaeser, E.L. & Scheinkman, J.A., 1993. "Economic Growth in a Cross-Section of Cities," Harvard Institute of Economic Research Working Papers 1645, Harvard - Institute of Economic Research.
  12. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
  13. Jovanovic, Boyan & Rob, Rafael, 1989. "The Growth and Diffusion of Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 56(4), pages 569-82, October.
  14. Zoltan J. Acs & Felix R. FitzRoy & Ian Smith, 1999. "High-Technology Employment and R&D in Cities: Heterogeneity vs Specialization," CRIEFF Discussion Papers 9920, Centre for Research into Industry, Enterprise, Finance and the Firm.
  15. repec:fth:stanho:e-95-4 is not listed on IDEAS
  16. Zoltan J Acs & Catherine Armington, 1998. "Longitudinal Establishment And Enterprise Microdata (LEEM) Documentation," Working Papers 98-9, Center for Economic Studies, U.S. Census Bureau.
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Citations

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Cited by:
  1. R. Jason Faberman, 2003. "Job Flows and Establishment Characteristics: Variations Across U.S. Metropolitan Areas," William Davidson Institute Working Papers Series 2003-609, William Davidson Institute at the University of Michigan.
  2. BOONE, Christophe & BROUWER, Aleid & JACOBS, Jan & VAN WITTELOOSTUIJN, Arjen, 2009. "Religious pluralism and organizational diversity: An empirical test for the city of Zwolle, the Netherlands, 1851-1914," ACED Working Papers 2009002, University of Antwerp, Faculty of Applied Economics.
  3. Braunerhjelm, Pontus & Borgman, Benny, 2006. "Agglomeration, Diversity and Regional Growth," Working Paper Series in Economics and Institutions of Innovation 71, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  4. Arauzo Carod, Josep Maria & Teruel Carrizosa, Mercedes, 2004. "A territorial approach to firm entry: The effect of city size," Working Papers 2072/1777, Universitat Rovira i Virgili, Department of Economics.
  5. Mendoza, Jorge Eduardo, 2003. "Efectos de la aglomeración y los encadenamientos industriales en el patrón de crecimiento manufacturero en México
    [Manufacturing specialization and urban aglommeration in the largest cities of M
    ," MPRA Paper 2854, University Library of Munich, Germany, revised 2003.

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