Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines

Abstract

We study the connection between entrepreneurship and growth through the lens of U.S. cities. Measures of initial entrepreneurship correlate strongly with urban employment growth for the United States, but endogeneity bedevils interpretation. Chinitz (1961) hypothesized that coal mines near to cities led to specialization in industries, like steel, with signi…cant scale economies and that those big …rms subsequently damped entrepreneurial human capital across several generations. Proximity to historical mining deposits is associated with reduced entrepreneurship for cities in the 1970s and onwards in industries unrelated to mining. We use historical mines as an instrument for our modern entrepreneurship measures and …nd a persistent link between entrepreneurship and city employment growth.JEL Classi…cation: L0, L1, L2, L6, N5, N9, O1, O4, R0, R1.

Path dependence in energy systems and economic development

“…persistent behaviour sixty years after conditions changed) is responsible for 60% of total coal-fired power station capacity in certain counties in the USA 39 . Two other examples of path dependence show that the proximity to nineteenth century coal mines in the US and the UK has been associated with less-developed entrepreneurial cultures today 40,41 . Another study indicates that temporary rationing policies can have long term effects on behaviour 42 .…”

Unconventional Gas and Oil Development in the United States: Economic Experience and Policy Issues

“…A related fourth reason for growth to lag is that large scale mining and manufacturing regions are not associated with entrepreneurship and small business development (e.g., in the case of coal mining, see Glaeser et al, 2012 andBetz et al, 2014). The loss of entrepreneurship and small business development can limit local economic growth (Rupasingha and Goetz, 2013), especially in lagging regions (Stephens and Partridge, 2011).…”

Personality Traits of Entrepreneurs: A Review of Recent Literature

“…There are often four-fold or larger differences in entrepreneurship rates across U.S. cities (e.g., Glaeser et al, 2015), and those for venture capital are even sharper (e.g., Samila and Sorenson, 2011). Moreover, the rate of new business formation is declining in Introduction the United States (e.g., Decker et al, 2014).…”