Which Small Towns Attract Start‐Ups and Why? Twenty Years of Evidence from Iowa

Georgeanne Artz, Younjun Kim, Peter Orazem and Peter J. Han

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: Using data on a sample of small Iowa towns consistently collected over two decades, we investigate how agglomeration economies, social capital, human capital, local fiscal policy, and natural amenities affect new firm entry. We find that human capital and agglomeration are more conducive to new firm entry than are natural amenities, local fiscal policy, or social capital. The impact of local fiscal policy is too small to overcome the locational disadvantages from insufficient endowment of human capital and agglomeration. A rural development approach that encourages firm entry in rural towns with the largest endowments of human capital and market agglomeration would be more successful than trying to raise firm entry in every town.

Date: 2020-01-01
New Economics Papers: this item is included in nep-bec, nep-geo and nep-ure
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Journal Article: Which Small Towns Attract Start‐Ups and Why? Twenty Years of Evidence from Iowa (2021)
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