How is COVID Changing the Geography of Entrepreneurship? Evidence from the Startup Cartography Project
Leveraging data from eight U.S. states from the Startup Cartography Project, this paper provides new insight into the changing nature and geography of entrepreneurship in the wake of the COVID pandemic. Consistent with other data sources, following an initial decline, the overall level of state-level business registrations not only rebounds but increases across all eight states. We focus here on the significant heterogeneity in this dynamic pattern of new firm formation across and within states. Specifically, there are significant differences in the dynamics of new business registrants across neighborhoods in terms of race and socioeconomic status. Areas including a higher proportion of Black residents, and more specifically higher median income Black neighborhoods, are associated with higher growth in startup formation rates between 2019 and 2020. Moreover, these dynamics are reflected in the passage of the major Federal relief packages. Even though legislation such as the CARES Act did not directly support new business formation, the passage and implementation of relief packages was followed by a relative increase in start-up formation rates, particularly in neighborhoods with higher median incomes and a higher proportion of Black residents.
We would like thank John Haltiwanger for useful comments and feedback. This work is part of the Startup Cartograpy Project (Andrews, et al, 2020), and we thank the generous support of the Kauffman Foundation through its Uncommon Methods and Metrics grant program. All errors and omissions are our own. All errors and omissions are our own. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
Scott Stern periodically receives compensation for speaking about or consulting about innovation policy and the Startup Cartography Project, typically at events organized by government agencies or other institutions involved in the policy process. He also receives compensation from the MIT Regional Entrepreneurship Acceleration Program, which features this project.