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Firm Entry and Exit in Iowa, 1992 - 2004


  • Yu, Li
  • Jolly, Robert W.
  • Orazem, Peter


This paper uses the pattern of firm entry and exit to develop a classification system for industries. The classifications include urban-rural bias; long-term growth; and firm survival patterns. The first captures the fact that sector-specific economic growth may be favored in urban areas for some industries and may benefit from low population density for others. Some industries have experienced long-term expansion in firm numbers while others have experienced a decline. Finally, some industries are characterized by high rates of both entry and exit while others have low rates of both. A taxonomy classifying industries according to those three criteria is developed in this paper. The taxonomy is applied to the Iowa subset of the National Establishment Time-Series (NETS) database over the period from 1992 to 2004. County level entry and exit rates are shown to be positively correlated across nearly all 2 digit NAICS code industries. Industry growth is found to be biased against rural areas. Not all of the industries experienced expansion or have a positive net entry rate. Entry of new firms replaces old incumbent firms in each industry but to different degrees. Understanding firm entry - exit pattern can help design customized policies of fostering expansion of specific industries in Iowa according to their location bias, industry growth patterns and development dynamics.

Suggested Citation

  • Yu, Li & Jolly, Robert W. & Orazem, Peter, 2008. "Firm Entry and Exit in Iowa, 1992 - 2004," Staff General Research Papers Archive 13007, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genres:13007

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    References listed on IDEAS

    1. Kandel, William, 2008. "Profile of Hired Farmworkers, A 2008 Update," Economic Research Report 56461, United States Department of Agriculture, Economic Research Service.
    2. Colson, Gregory & Huffman, Wallace E. & Rousu, Matthew C., 2011. "Improving the Nutrient Content of Food through Genetic Modification: Evidence from Experimental Auctions on Consumer Acceptance," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 36(2), August.
    3. Sandler,Todd, 1997. "Global Challenges," Cambridge Books, Cambridge University Press, number 9780521587495, March.
    4. Gordon H. Hanson, 2006. "Illegal Migration from Mexico to the United States," Journal of Economic Literature, American Economic Association, vol. 44(4), pages 869-924, December.
    5. Clare A. Narrod & Keith O. Fuglie, 2000. "Private investment in livestock breeding with implications for public research policy," Agribusiness, John Wiley & Sons, Ltd., vol. 16(4), pages 457-470.
    6. Huffman Wallace E. & Huffman Sonya K & Rickertsen Kyrre & Tegene Abebayehu, 2010. "Over-Nutrition and Changing Health Status in High Income Countries," Forum for Health Economics & Policy, De Gruyter, vol. 13(1), pages 1-44, June.
    7. Matthew Rousu & Wallace E. Huffman & Jason F. Shogren & Abebayehu Tegene, 2007. "Effects And Value Of Verifiable Information In A Controversial Market: Evidence From Lab Auctions Of Genetically Modified Food," Economic Inquiry, Western Economic Association International, vol. 45(3), pages 409-432, July.
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    Taxonomy; Expansion; Churning; Entrepreneurship; Economic Development; entry-exit pattern; location bias;

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