ENTREPRENEURSHIP AND URBAN GROWTH: AN EMPIRICAL ASSESSMENT WITH HISTORICAL MINES

We study entrepreneurship and growth through the lens of U.S. cities. Initial entrepreneurship correlates strongly with urban employment growth, but endogeneity bedevils interpretation. Chinitz (1961) hypothesized that coal mines near cities led to specialization in industries, like steel, with significant scale economies and that those big firms subsequently damped entrepreneurship across several generations. Proximity to historical mining deposits is associated with reduced entrepreneurship for cities in the 1970s and onward in industries unrelated to mining. We use historical mines as an instrument for our modern entrepreneurship measures and find a persistent link between entrepreneurship and city employment growth.