Which Small Towns Attract Start‐Ups and Why? Twenty Years of Evidence from Iowa. Issue 2 (24th September 2020)

• Record Type: Journal Article
• Authors: Artz, Georgeanne M.; Kim, Younjun; Orazem, Peter F.; Han, Peter J.
• Is Part Of: American journal of agricultural economics. Volume 103:Issue 2(2021)
• Page Start: 702
• Page End: 720
• Publication Date: 2020-09-24
• Subjects: agglomeration -- firm location -- human capital -- rural; M13 -- R11 -- R39; Agriculture -- Economic aspects -- Periodicals; Agriculture -- Periodicals; 338.105
• DOI: 10.1111/ajae.12144
• Languages: English
• ISSNs: 0002-9092

Abstract

Abstract : Using data on a sample of small Iowa towns consistently collected over two decades, we investigate how agglomeration economies, social capital, human capital, local fiscal policy, and natural amenities affect new firm entry. We find that human capital and agglomeration are more conducive to new firm entry than are natural amenities, local fiscal policy, or social capital. The impact of local fiscal policy is too small to overcome the locational disadvantages from insufficient endowment of human capital and agglomeration. A rural development approach that encourages firm entry in rural towns with the largest endowments of human capital and market agglomeration would be more successful than trying to raise firm entry in every town.