Citation

Discussion Paper Details

Please find the details for DP14643 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Entrepreneurship and the fight against poverty in US Cities

Author(s): Neil Lee and Andrés Rodríguez-Pose

Publication Date: April 2020

Keyword(s): cities, economic development, entrepreneurship, poverty and USA

Programme Area(s): International Trade and Regional Economics

Abstract: Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors â?? and, therefore, is more likely to have positive local multiplier effects â?? or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.

For full details and related downloads, please visit: https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14643

Bibliographic Reference

Lee, N and Rodríguez-Pose, A. 2020. 'Entrepreneurship and the fight against poverty in US Cities'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=14643