Friday, June 01, 2012

Missing Migration

Migration is an entrepreneurial act. A decrease in geographic mobility will dampen the startup spirit. Migrants are less risk averse. Cities attract lots of migrants. Thus, we see entrepreneurial activity cluster in urban environments. That's my alternative theory to that of the density/proximity dividend.

Along comes a study (hat tip Washington Post) concluding "that purchasing a house reduces the likelihood of starting a business by 20-25%" in the United Kingdom. The rationale offered is financial. There is only so much capital to go around. Without reading the paper, my reaction is to blame how owning a home is a drag on geographic mobility. Skimming the research, I see the following consideration (i.e. control):

We also checked that our findings are not more generally driven by individuals" mobility decisions by focusing on workers who live in the same region throughout the period of analysis (approximately 80% of the observations).

I'm trying to wrap my head around this. I'm not sure I understand the control. I would hazard to guess that a homeowner is significantly less likely to leave the region. I'd be interested in evaluating the residual observations (20%) that did leave the region. Were they more entrepreneurial than those who stayed? The sample size is probably too small, but you get the point. I'm still of the opinion that it is the migration that matters.


Matthew Hall said...

But surely, the risk-taking makes them migrants, rather than the migration making them risk-takers. The task is to get more risk-takers and migration helps that, but it isn't the cause of it, it is evidence of it.

Anonymous said...

There are also people like myself who don't like this world you describe. I like to live around people like myself. I believe in sticking out the hard times where I live even while people are moving to places with lower taxes and higher opportunity. I dont really like walking down my street and not passing anyone who speaks my (native) language. I don't care about being wealthy or having flashy start ups or new gadgets. I just like my family, my friends, and my home area, and as the steamroller of modernity keeps rolling it feels more and more hostile.