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Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines

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  • Edward L. Glaeser

    ()
    (Harvard University)

  • Sari Pekkala Kerr

    ()
    (Wellesley College)

  • William R. Kerr

    ()
    (Harvard Business School, Entrepreneurial Management Unit)

Abstract

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.

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Bibliographic Info

Paper provided by Harvard Business School in its series Harvard Business School Working Papers with number 13-015.

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Length: 67 pages
Date of creation: Aug 2012
Date of revision:
Handle: RePEc:hbs:wpaper:13-015

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Keywords: Entrepreneurship; Industrial Organization; Chinitz; Agglomeration; Clusters; Cities; Mines.;

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Cited by:
  1. Holger Breinlich & Gianmarco I. P. Ottaviano & Jonathan R. W. Temple, 2013. "Regional Growth and Regional Decline," CEP Discussion Papers dp1232, Centre for Economic Performance, LSE.
  2. Michael Wyrwich, 2013. "Ready, set, go! Why are some regions entrepreneurial jump-starters?," Jena Economic Research Papers 2013-037, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Duranton, Gilles & Puga, Diego, 2013. "The growth of cities," CEPR Discussion Papers 9590, C.E.P.R. Discussion Papers.
  4. Bozkaya, Ant & Kerr, William R., 2013. "Labor regulations and European venture capital," Research Discussion Papers 30/2013, Bank of Finland.
  5. Leah Platt Boustan & Devin Bunten & Owen Hearey, 2013. "Urbanization in the United States, 1800-2000," NBER Working Papers 19041, National Bureau of Economic Research, Inc.
  6. Fleming, David A. & Measham, Thomas G., 2013. "Disentangling the Natural Resources Curse: National and Regional Socioeconomic Impacts of Resource Windfalls," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150526, Agricultural and Applied Economics Association.
  7. Howard Bodenhorn & David Cuberes, 2010. "Financial Development and City Growth: Evidence from Northeastern American Cities, 1790-1870," NBER Working Papers 15997, National Bureau of Economic Research, Inc.
  8. Edward Glaeser, 2013. "A Review of Enrico Moretti's The New Geography of Jobs," Journal of Economic Literature, American Economic Association, vol. 51(3), pages 825-37, September.
  9. Fritsch, Michael & Kritikos, Alexander S. & Pijnenburg, Katharina, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: Evidence from Germany," IZA Discussion Papers 7852, Institute for the Study of Labor (IZA).

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