Entrepreneurship and the fight against poverty in US cities

Neil Lee and Andrés Rodríguez-Pose

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Entrepreneurship is often seen as the cure-all solution for poverty reduction. Proponents argue that it leads to job creation, higher incomes and lower poverty rates in the cities in which it occurs. Others argue that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesize that the impact of entrepreneurship will depend on whether it is in tradeable sectors, so likely to have positive local multiplier effects, or non-tradeable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs, a result we confirm using an instrumental variable approach, taking the inheritance of entrepreneurial traits as the instruments. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.

Keywords: entrepreneurship; poverty; cities; economic development; USA (search for similar items in EconPapers)
JEL-codes: J21 J31 M13 O18 R11 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2021-02-01
New Economics Papers: this item is included in nep-ent, nep-ino, nep-lma, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published in Environment and Planning A, 1, February, 2021, 53(1), pp. 31 - 52. ISSN: 0308-518X

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http://eprints.lse.ac.uk/104073/ Open access version. (application/pdf)

Related works:
Journal Article: Entrepreneurship and the fight against poverty in US cities (2021)
Working Paper: Entrepreneurship and the fight against poverty in US Cities (2020)
Working Paper: Entrepreneurship and the fight against poverty in US Cities (2020)
Working Paper: Entrepreneurship and the fight against poverty in US Cities (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:104073

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