Local entrepreneurship clusters in cities

Abstract

We show that entrepreneurs are co-located within cities. One plausible source of such spatial clustering is local social interactions, where individuals' decisions to become entrepreneurs are influenced by entrepreneurial neighbors. Using geo-coded matched employer-employee data for Sweden, we find that sharing residential neighborhood with established entrepreneurs has a statistically significant and robust influence on the probability that an individual leaves employment for entrepreneurship. An otherwise average neighborhood with a 5% point higher entrepreneurial intensity, all else equal, produces between six and seven additional entrepreneurs per square kilometer, each year. Our estimates suggest a local feedback-effect in which the presence of established entrepreneurs in a neighborhood influences the emergence of new local entrepreneurs. Our analysis supports the conjecture that social interaction effects constitute a mechanism by which local entrepreneurship clusters in cities develop and persist over time.

Cite this work

No public copy is stored for this record, so only the metadata is cited.

Stored only when both papers are in the corpus — 118 citations exist upstream.

Papers that cite the same references — the relational fallback while embeddings are still backfilling.