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Demand pull or supply push? Metro-level analysis of start-ups in the United States

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  • Yasuyuki Motoyama
  • Emil Malizia

Abstract

This paper examines factors related to higher regional start-up activity. Two hypotheses are formulated to explain start-ups: the demand-pull hypothesis argues that the amount, growth and density of aggregate demand will stimulate start-ups in any sectors; and the supply-push hypothesis argues that factors including high-tech industry concentrations, patent generation, industrial and university research activities, and government funding will stimulate high-tech start-ups. Both hypotheses support the importance of human capital factors, such as a highly educated or skilled workforce and thick labour markets. The paper incorporates these various measures and employs cross-sectional multivariate analysis of start-up rates in all sectors and in high-tech sectors in 366 metropolitan areas as defined by the US Census Bureau in 2009. Overall, very strong support is found for the demand-pull hypothesis, but only modest support for the supply-push hypothesis, which provide substantial caveats for public policy to promote start-up activities.

Suggested Citation

  • Yasuyuki Motoyama & Emil Malizia, 2017. "Demand pull or supply push? Metro-level analysis of start-ups in the United States," Regional Studies, Regional Science, Taylor & Francis Journals, vol. 4(1), pages 232-246, January.
    • Handle: RePEc:taf:rsrsxx:v:4:y:2017:i:1:p:232-246
    DOI: 10.1080/21681376.2017.1379885
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