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

  • Edward Glaeser
  • William Kerr

Why are some places more entrepreneurial than others? We use Census Bureau data to study local determinants of manufacturing startups across cities and industries. Demo- graphics 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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File URL: ftp://ftp2.census.gov/ces/wp/2008/CES-WP-08-37.pdf
File Function: First version, 2008
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Paper provided by Center for Economic Studies, U.S. Census Bureau in its series Working Papers with number 08-37.

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Length: 52 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:cen:wpaper:08-37
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