Entrepreneurship and the City

47 Pages Posted: 17 Jul 2007 Last revised: 28 Nov 2007

Edward L. Glaeser

Harvard University - Department of Economics; Brookings Institution; National Bureau of Economic Research (NBER)

Multiple version iconThere are 2 versions of this paper

Date Written: October 2007

Abstract

Why do levels of entrepreneurship differ across America's cities? This paper presents basic facts on two measures of entrepreneurship: the self-employment rate and the number of small firms. Both of these measures are correlated with urban success, suggesting that more entrepreneurial cities are more successful. There is considerable variation in the self-employment rate across metropolitan areas, but about one-half of this heterogeneity can be explained by demographic and industrial variation. Self-employment is particularly associated with abundant, older citizens and with the presence of input suppliers. Conversely, small firm size and employment growth due to unaffiliated new establishments is associated most strongly with the presence of input suppliers and an appropriate labor force. I also find support for the Chinitz (1961) hypothesis that entrepreneurship is linked to a large number of small firms in supplying industries. Finally, there is a strong connection between area-level education and entrepreneurship.

Keywords: entrepreneurship, cities, self-employment, small firms, education

Suggested Citation

Glaeser, Edward L., Entrepreneurship and the City (October 2007). Harvard Institute of Economic Research Discussion Paper No. 2140. Available at SSRN: https://ssrn.com/abstract=1001108 or http://dx.doi.org/10.2139/ssrn.1001108

Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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