Migration is an entrepreneurial act. A decrease in geographic mobility will dampen the startup spirit. Migrants are less risk averse. Cities attract lots of migrants. Thus, we see entrepreneurial activity cluster in urban environments. That's my alternative theory to that of the density/proximity dividend.
Along comes a study (hat tip Washington Post) concluding "that purchasing a house reduces the likelihood of starting a business by 20-25%" in the United Kingdom. The rationale offered is financial. There is only so much capital to go around. Without reading the paper, my reaction is to blame how owning a home is a drag on geographic mobility. Skimming the research, I see the following consideration (i.e. control):
We also checked that our findings are not more generally driven by individuals" mobility decisions by focusing on workers who live in the same region throughout the period of analysis (approximately 80% of the observations).
I'm trying to wrap my head around this. I'm not sure I understand the control. I would hazard to guess that a homeowner is significantly less likely to leave the region. I'd be interested in evaluating the residual observations (20%) that did leave the region. Were they more entrepreneurial than those who stayed? The sample size is probably too small, but you get the point. I'm still of the opinion that it is the migration that matters.
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