Small Business Start-Ups in the United States: Estimates of the Effects of Characteristics of States

Posted: 17 Nov 2009

See all articles by Timothy Bartik

Timothy Bartik

W.E. Upjohn Institute for Employment Research

Date Written: 1989


Demonstrates how small business startups are affected by the characteristics of American states, and provides a methodological approach useful for advancing research on this topic. A simple model focusing on small business startups is created, in order to correspond better and more closely to the decision problems facing potential entrepreneurs. Panel data is used to create a model which examines the relationship between changes over time in small business starts and changes in the independent variables. Data were gathered from the U.S. Establishment and Longitudinal Microdata (USELM) file of the Small Business Administration's Small Business Data Base. Findings indicate that the most important influence on small business starts is the size of market demand. The proportion of foreign immigrants in states and education level of the labor force also have highly significant positive effects on small business starts. However, higher property taxes, entry barriers in the banking market, and unionization were each found to negatively affect small business starts. In addition, some public services were found to encourage small business starts and the estimated effects of labor costs to small business starts were surprisingly small. (SFL)

Keywords: Property taxes, Regional resources, Firm location, Public policies, Management decisions, Educational background, Market demand, Barriers to entry, Bank loans, Labor unions, Startup rates, Local government, Regional differences

Suggested Citation

Bartik, Timothy, Small Business Start-Ups in the United States: Estimates of the Effects of Characteristics of States (1989). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN:

Timothy Bartik (Contact Author)

W.E. Upjohn Institute for Employment Research ( email )

300 South Westnedge Avenue
Kalamazoo, MI 49007-4686
United States

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