Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines

67 Pages Posted: 25 Aug 2012 Last revised: 27 Oct 2014

See all articles by Edward L. Glaeser

Edward L. Glaeser

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

Sari Pekkala Kerr

Wellesley College

William R. Kerr

Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 3 versions of this paper

Date Written: August 2012

Abstract

Measures of entrepreneurship, such as average establishment size and the prevalence of start-ups, correlate strongly with employment growth across and within metropolitan areas, but the endogeneity of these measures bedevils interpretation. Chinitz (1961) hypothesized that coal mines near Pittsburgh led that city to specialization in industries, like steel, with significant scale economies and that those big firms led to a dearth of entrepreneurial human capital across several generations. We test this idea by looking at the spatial location of past mines across the United States: proximity to historical mining deposits is associated with bigger firms and fewer start-ups in the middle of the 20th century. We use mines as an instrument for our entrepreneurship measures and find a persistent link between entrepreneurship and city employment growth; this connection works primarily through lower employment growth of start-ups in cities that are closer to mines. These effects hold in cold and warm regions alike and in industries that are not directly related to mining, such as trade, finance and services. We use quantile instrumental variable regression techniques and identify mostly homogeneous effects throughout the conditional city growth distribution.

Suggested Citation

Glaeser, Edward L. and Kerr, Sari Pekkala and Kerr, William R., Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines (August 2012). NBER Working Paper No. w18333. Available at SSRN: https://ssrn.com/abstract=2136003

Edward L. Glaeser (Contact Author)

Harvard University - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Sari Pekkala Kerr

Wellesley College ( email )

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

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