Why do businesses grow faster in urban areas than in rural areas?

• Main Authors: LEE, Jungho, XU, Jianhuan
• Format: text
• Language: English
• Published: Institutional Knowledge at Singapore Management University 2020
• Subjects: Firm Dynamics; Firm Sorting; Borrowing Constraint; Firm Learning; Firm Selection; Urban Economy; Growth and Development; Industrial Organization
• Online Access: https://ink.library.smu.edu.sg/soe_research/2027; https://ink.library.smu.edu.sg/context/soe_research/article/3026/viewcontent/region_firm_growth.pdf
• Institution: Singapore Management University

We document that growth of business earnings is mostly observed among young firmsin metro areas. Three explanations are considered: metro areas attract more-productiveentrepreneurs, and reaching the optimal size takes time due to borrowing constraints;metro areas provide better learning opportunities...