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The Declining Local Bias of Entrepreneurship in the United States

Author

Listed:
  • Innessa Colaiacovo
  • Margaret G. Dalton
  • Sari Pekkala Kerr
  • William R. Kerr

Abstract

Multiple studies document a local bias of entrepreneurship (LBE) in recent decades, where self-employed entrepreneurs are systematically more likely than wage workers to operate in their region of birth. This paper documents an important new fact: the LBE has been declining in the United States since 1970. The LBE is still present for white men engaged in self-employment, but it no longer exists for the overall U.S.-born workforce. We connect that decline to the transformation of self-employment away from high startup-capital sectors and the reduced opportunity for local self-employed entrepreneurs to achieve high incomes compared to wage work.

Suggested Citation

  • Innessa Colaiacovo & Margaret G. Dalton & Sari Pekkala Kerr & William R. Kerr, 2026. "The Declining Local Bias of Entrepreneurship in the United States," NBER Working Papers 35088, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:35088
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • G51 - Financial Economics - - Household Finance - - - Household Savings, Borrowing, Debt, and Wealth
    • J11 - Labor and Demographic Economics - - Demographic Economics - - - Demographic Trends, Macroeconomic Effects, and Forecasts
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R13 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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