Local Origins of Business Formation

Emin Dinlersoz, Timothy Dunne, John Haltiwanger and Veronika Penciakova
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Veronika Penciakova: https://www.atlantafed.org/research/economists/penciakova-veronika.aspx

Policy Hub, 2023, vol. 2023, issue 7, 12

Abstract: Using comprehensive administrative data on business applications, we find that startups per capita exhibit enormous variation across counties and tracts in the United States. We decompose this spatial variation into two components: variation in business ideas per capita and in their rate of transition to startups. Both components matter for the variation in startups per capita. Furthermore, local demographic, economic, financial, and business conditions account for a significant fraction of the variation in startups per capita and in its components. In particular, income, education, age, and foreign-born share are strongly and positively associated with idea generation and transition rate. The relationship between local conditions and ideas generally differs in magnitude from the relationship with the rate at which these ideas transition into employer businesses. Interestingly, certain conditions are positively associated with ideas but negatively with transition rates. The predicted rank of locations based only on observable local conditions closely relates to the actual ranking of locations in terms of startups per capita, making it possible to characterize high-startup locations using observable local conditions alone.

Keywords: entrepreneurship; firm entry; business formation; business dynamism; economic geography (search for similar items in EconPapers)
JEL-codes: L26 R12 R23 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: The Local Origins of Business Formation (2023)
Working Paper: The Local Origins of Business Formation (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:a00068:97634

DOI: 10.29338/ph2023-7

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