Entrepreneurship and Regional Growth Regimes in the United States

Abstract

We investigate regional growth regimes in the US states from 1980 to 2014. Based on start-up rates and employment growth as suggested by Audretsch and Fritsch (2002), we classify states into routinized, entrepreneurial, revolving door, and downsizing regimes. The results indicate that there was no significant association between start-up rates and employment growth in the 1980s, but a positive relationship in the 1990s, 2000s, and 2010s. Further, we document that the entrepreneurial and the downsizing regimes are attractor regimes that tend to stick, whereas the routinized and revolving door regimes are transitionary regimes. Importantly, states in the routinized regime predominantly move to the downsizing regime, suggesting that an over-reliance on established companies relative to start-ups in the state may threaten employment growth in the long run.