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The Declining Local Bias of Entrepreneurship in the United States
Multiple studies document a local bias of entrepreneurship (LBE) in recent decades, where self-employed entrepreneurs are systematically more likely than wage workers to operate in their region of birth. This paper documents an important new fact: the LBE has been declining in the United States since 1970. The LBE is still present for white men engaged in self-employment, but it no longer exists for the overall U.S.-born workforce. We connect that decline to the transformation of self-employment away from high startup-capital sectors and the reduced opportunity for local self-employed entrepreneurs to achieve high incomes compared to wage work.
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