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Extending Place-Based Innovation Policy to Rural Areas: Using Oaxaca-Blinder Decomposition to Identify Endowment Deficiencies

Author

Listed:
  • Zheng Tian
  • Luyi Han
  • Timothy Wojan
  • Stephan J. Goetz

Abstract

Place-based policy is premised on the idea that productive investments that address endowment deficiencies may release latent comparative advantages, stimulating growth while reducing regional disparities. Extending place-based policy to the domain of innovation is conceptually challenging given conventional wisdom that settlement size is the principal determinant of agglomeration economies that fuels innovation. However, growing concern that more places are being left behind by the innovation economy has prompted greater interest in ways to expand the geography of innovation. Using confidential firm-level data from the 2018 Annual Business Survey, this study examines differences in self-reported innovation activity between firms in rural and urban counties to identify possible endowment deficiencies. We do this by employing the Oaxaca-Blinder decomposition method to quantify the urban-rural innovation gap to better understand the relative contributions of firm characteristics, owner characteristics, and county-level factors.

Suggested Citation

  • Zheng Tian & Luyi Han & Timothy Wojan & Stephan J. Goetz, 2026. "Extending Place-Based Innovation Policy to Rural Areas: Using Oaxaca-Blinder Decomposition to Identify Endowment Deficiencies," Working Papers 26-48, Center for Economic Studies, U.S. Census Bureau.
    • Handle: RePEc:cen:wpaper:26-48
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    References listed on IDEAS

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    1. Stuart S. Rosenthal & William C. Strange, 2010. "Small Establishments/Big Effects: Agglomeration, Industrial Organization and Entrepreneurship," NBER Chapters, in: Agglomeration Economics, pages 277-302, National Bureau of Economic Research, Inc.
    2. Zoltan J. Acs & Luc Anselin & Attila Varga, 2008. "Patents and Innovation Counts as Measures of Regional Production of New Knowledge," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 11, pages 135-151, Edward Elgar Publishing.
    3. Zoltan J. Acs & David B. Audretsch, 1993. "Analysing Innovation Output Indicators: The US Experience," Palgrave Macmillan Books, in: Alfred Kleinknecht & Donald Bain (ed.), New Concepts in Innovation Output Measurement, chapter 2, pages 10-41, Palgrave Macmillan.
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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