The Rate of Proprietorship Among Metropolitan Areas: The Impact of the Local Economic Environment and Capital Resources

Authors

  • Paul A. Coomes,

    Corresponding author
    1. Department of Economics, the University of Louisville, Louisville, Kentucky, USA
      Paul A. Coomes, tel.: 502-852-4841; e-mail: paul.coomes@louisville.edu, to Jose Fernandez at jmfern02@gwise.louisville.edu, and to Stephan F. Gohmann at sfgohm01@louisville.edu.
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  • Jose Fernandez,

    Corresponding author
    1. Department of Economics, the University of Louisville, Louisville, Kentucky, USA
      Paul A. Coomes, tel.: 502-852-4841; e-mail: paul.coomes@louisville.edu, to Jose Fernandez at jmfern02@gwise.louisville.edu, and to Stephan F. Gohmann at sfgohm01@louisville.edu.
    Search for more papers by this author
  • Stephan F. Gohmann

    Corresponding author
    1. Department of Economics, the University of Louisville, Louisville, Kentucky, USA
      Paul A. Coomes, tel.: 502-852-4841; e-mail: paul.coomes@louisville.edu, to Jose Fernandez at jmfern02@gwise.louisville.edu, and to Stephan F. Gohmann at sfgohm01@louisville.edu.
    Search for more papers by this author

Paul A. Coomes, tel.: 502-852-4841; e-mail: paul.coomes@louisville.edu, to Jose Fernandez at jmfern02@gwise.louisville.edu, and to Stephan F. Gohmann at sfgohm01@louisville.edu.

Abstract

Legal rules and the economic environment play an important role in the decision to become an entrepreneur. Many studies examine the effect of such institutions at the national or state level. The metropolitan area may be a more appropriate geography to examine, since entrepreneurs often serve a more localized market and there is wide variation in both the environment for and incidence of proprietorship among metropolitan areas. We find that proprietorship increases with home equity, intangible wealth, unemployment, relative earnings of proprietors, and population. It decreases with higher state income tax rates and minimum wages.

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