Employment growth and gender-specific entrepreneurial externalities in cities

Recent theories of economic development view learning processes associated with knowledge externalities as the engines of economic growth. As suggested by Marshall (1920), entrepreneurs congregate next to one another to learn from each other. However, cities may differ in the generation and transmission of entrepreneurial ideas and, therefore, both entrepreneurial externalities and economic growth vary across cities. This process may be conditioned by gender. Indeed, empirical evidence exists that the characteristics of business owners that influence knowledge externalities – such as access to research and development, level of education and experience, among others – differ by gender. In this paper, we examine the effect of gender-specific entrepreneurial externalities, measured by the spatial concentration of male and female entrepreneurs (separately) across cities, on urban employment growth between 1980 and 2007. This paper’s econometric model and choice of control variables follow the city growth literature, which exploits the availability of panel data for metropolitan areas by introducing area fixed effects in the urban growth equation and using start-of-period values to reduce the potential for simultaneity bias (reverse causality).