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Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?

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Author Info
Edward L. Glaeser () (Harvard University, John F. Kennedy School of Government; Faculty of Arts and Sciences)
William R. Kerr () (Harvard Business School, Entrepreneurial Management Unit)

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Abstract

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 sixty and eighty percent of manufacturing entry. We use spatial distributions of natural cost advantages to address partially endogeneity concerns.

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Publisher Info
Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 09-055.

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Length: 52 pages
Date of creation: Oct 2008
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Handle: RePEc:hbs:wpaper:09-055

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Related research
Keywords: Entrepreneurship; Industrial Organization; Agglomeration; Labor Markets; Input-Output Flows; Innovation; Research and Development; Patents.;

Other versions of this item:

Find related papers by JEL classification:
J2 - Labor and Demographic Economics - - Demand and Supply of Labor
L0 - Industrial Organization - - General
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
L6 - Industrial Organization - - Industry Studies: Manufacturing
O3 - Economic Development, Technological Change, and Growth - - Technological Change
R2 - Urban, Rural, and Regional Economics - - Household Analysis

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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. William Kerr & Ramana Nanda, 2006. "Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship," Harvard Business School Working Papers 07-033, Harvard Business School, revised Oct 2008. [Downloadable!]
    Other versions:
  2. Yasuhiro Sato & Takatoshi Tabuchi & Kazuhiro Yamamoto, 2009. "Market Size and Entrepreneurship," Discussion Papers in Economics and Business 09-07, Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP). [Downloadable!]
  3. William R. Kerr & William F. Lincoln, 2008. "The Supply Side of Innovation: H-1B Visa Reforms and US Ethnic Invention," Harvard Business School Working Papers 09-005, Harvard Business School. [Downloadable!]
  4. Shawn Kantor & Alexander Whalley, 2009. "Do Universities Generate Agglomeration Spillovers? Evidence from Endowment Value Shocks," NBER Working Papers 15299, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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