Entrepreneurship, dynamic externality, and urban growth in the United States

Includes bibliographical references (pages [248]-271).It is the principal task of this study to examine what factors determine urban growth. Using a novel data set from the U.S. Census Bureau's County Business Patterns for the period 1974–1997, this study attempts to add a new dimension to existing work on geographic concentration and entrepreneurship, and to improve our understanding of the determinants of urban growth. To this author's knowledge, there have been no quantitative efforts to establish the systematic relationship between entrepreneurship and dynamic externality and urban growth. Traditionally, urban economic analysis has focused on economies of agglomeration while ignoring entrepreneurship. Recently, broader theories of entrepreneurship have stressed the important role of entrepreneurship in economic growth. However, few urban researchers have given entrepreneurship empirical attention, owing partly to a lack of appropriate data and partly to a lack of appropriate measurement. This study utilizes hand-collecting data on the 10 largest two-digit industries and five high-tech manufacturing industries in 317 metropolitan areas. A standard production framework, modified to incorporate entrepreneurship, guides the econometric analysis of this study. The empirical analysis confirms the importance of entrepreneurship in urban growth, as entrepreneurship was found to promote urban employment growth. Human capital was positively related to urban employment and productivity growth. Generally, industrial specialization hurt both employment growth and productivity growth. Jacobs's diversity was found to play an ambiguous role in generating employment and productivity growth. In particular, Jacobs's diversity hurt employment growth in the declining industries. However, industrial specialization spurs employment growth in the growing industries. Geography, right-to-work laws, and interurban knowledge spillovers proved important as well. These results are robust to different specifications, different measures, and different levels of analysis. The findings of this study suggest that entrepreneurship, education, pro-business policy, and geographic advantages play an important role in urban growth, whereas neither a highly specialized nor a diversified metropolitan employment structure can guarantee its future growth.Ph.D. (Doctor of Philosophy