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| Title: | Firm Entry, Firm Exit, and Urban‐Biased Growth |
| Authors: | Yu, Li
Jolly, Robert W.
Orazem, Peter |
| Authors (Email): | Yu, Li (yuli@iastate.edu)
Jolly, Robert W. (rjolly@iastate.edu)
Orazem, Peter (pfo@iastate.edu) |
| Keywords: | Entry – Exit Pattern
Taxonomy
Urban-Bias
Expansion
Churning
Entrepreneurship
Economic Development |
| JEL Codes: | L26
L53 |
| Issue Date: | 2009-08-25 |
| Series/Report no.: | Econ Working Paper
09018 |
| Abstract: | We introduce a taxonomy that classifies industries using three criteria: net growth in the
number of firms; the interrelationship between firm entry and firm exit; and the degree of urbanbias
in industry growth. We show that in 9 of 15 two-digit NAICS industries investigated, there
is evidence of urban bias consistent with a comparative advantage to starting a business in urban
markets. The urban advantage is due primarily to faster firm entry rates. Urban and rural firms
have similar firm exit rates, consistent with a presumption that there are equal expected profit
rates conditional on entry across markets. Urban areas grow faster because they induce faster
firm entry and not because urban firms are more likely to succeed. |
| URI: | http://purl.umn.edu/54078 |
| Institution/Association: | Iowa State University>Department of Economics>Working Papers |
| Total Pages: | 30 |
| Collections: | Working Papers
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| paper_13108_09018.pdf | | 212Kb | PDF | View/Open |
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