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Does local business ownership insulate cities from economic shocks?

Listed author(s):
  • Kolko, Jed
  • Neumark, David

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 that 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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File URL: http://www.sciencedirect.com/science/article/pii/S0094-1190(09)00060-6
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Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 67 (2010)
Issue (Month): 1 (January)
Pages: 103-115

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Handle: RePEc:eee:juecon:v:67:y:2010:i:1:p:103-115
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622905

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