The impact of various characteristics of 382 United States labour market areas on subsequent new firm birth rates for 1986-88 was explored using linear regression modeling techniques. Growth in local demand had a major impact in all situations. Statistically significant evidence of an impact of urbanization/agglomeration, unemployment, personal/household wealth, and small firm presence/economic
... [Show full abstract] specialization was present, but tended to vary for different types of labour market areas and different economic sectors. There was little evidence of an impact related to local government spending. Correlations between birth rates and subsequent economic growth, measured by net job growth, were almost universally positive. Regression based linear models indicated that a small independent, positive impact of manufacturing firm birth rates on subsequent economic growth. This suggested that new firm births may be a necessary but not sufficient factor in creating regional economic growth.
