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Why Do Rural Firms Live Longer?

Author

Listed:
  • Yu, Li
  • Orazem, Peter F.
  • Jolly, Robert W.

Abstract

For the first thirteen years after entry, the hazard rate for firm exits is persistently higher for urban than for rural firms. While differences in observed industry market, local market, and firm attributes explain some of the rural/urban gap in firm survival, rural firms retain a survival advantage 18% greater in Iowa and 58% greater in Kansas than observationally equivalent urban firms. Evidence is consistent with a lower salvage price for the capital assets of failed rural firms. Entrepreneurs will require a higher success probability to enter a rural market rather than an urban market to leave their expected profits equal.

Suggested Citation

  • Yu, Li & Orazem, Peter F. & Jolly, Robert W., 2011. "Why Do Rural Firms Live Longer?," ISU General Staff Papers 201104010700001086, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genstf:201104010700001086
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    Cited by:

    1. is not listed on IDEAS
    2. Stevenson, Marcie & Artz, Georgeanne, 2017. "Improving rural business development, one firm at a time: A look at the effects of the USDA’s Value-Added Producer Grant on firm survival," 2017 Annual Meeting, February 4-7, 2017, Mobile, Alabama 252785, Southern Agricultural Economics Association.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General

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