Extending Place-Based Innovation Policy to Rural Areas: Using Oaxaca-Blinder Decomposition to Identify Endowment Deficiencies

Zheng Tian, Luyi Han, Timothy Wojan and Stephan J. Goetz

Working Papers from U.S. Census Bureau, Center for Economic Studies

Abstract: Place-based policy is premised on the idea that productive investments that address endowment deficiencies may release latent comparative advantages, stimulating growth while reducing regional disparities. Extending place-based policy to the domain of innovation is conceptually challenging given conventional wisdom that settlement size is the principal determinant of agglomeration economies that fuels innovation. However, growing concern that more places are being left behind by the innovation economy has prompted greater interest in ways to expand the geography of innovation. Using confidential firm-level data from the 2018 Annual Business Survey, this study examines differences in self-reported innovation activity between firms in rural and urban counties to identify possible endowment deficiencies. We do this by employing the Oaxaca-Blinder decomposition method to quantify the urban-rural innovation gap to better understand the relative contributions of firm characteristics, owner characteristics, and county-level factors.

Keywords: Place-based innovation policy; Rural–urban innovation gap; Oaxaca–Blinder decomposition; Annual Business Survey (search for similar items in EconPapers)
JEL-codes: O31 R11 (search for similar items in EconPapers)
Date: 2026-07
New Economics Papers: this item is included in nep-sbm
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https://www2.census.gov/library/working-papers/2026/adrm/ces/CES-WP-26-48.pdf First version, 2026 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:cen:wpaper:26-48

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