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Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines

Author

Listed:
  • Edward L. Glaeser

    (Harvard University)

  • Sari Pekkala Kerr

    (Wellesley College)

  • William R. Kerr

    (Harvard Business School, Entrepreneurial Management Unit)

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

  • Edward L. Glaeser & Sari Pekkala Kerr & William R. Kerr, 2012. "Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines," Harvard Business School Working Papers 13-015, Harvard Business School, revised Oct 2015.
    • Handle: RePEc:hbs:wpaper:13-015
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    References listed on IDEAS

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    More about this item

    Keywords

    Entrepreneurship; Industrial Organization; Chinitz; Agglomeration; Clusters; Cities; Mines.;
    All these keywords.

    JEL classification:

    • L0 - Industrial Organization - - General
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L6 - Industrial Organization - - Industry Studies: Manufacturing
    • N5 - Economic History - - Agriculture, Natural Resources, Environment and Extractive Industries
    • N9 - Economic History - - Regional and Urban History
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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    1. Historical Economic Geography

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