Georgeanne Artz (1974-2019), Peter Orazem from Iowa State University, Peter Han from U.S. Department of Housing and Urban Development, and Younjun Kim from Southern Connecticut State University published the article “Which small towns attract start-ups and why? Twenty years of evidence from Iowa” in the American Journal of Agricultural Economics.
It is very difficult for small towns to overcome the disadvantages of small populations. However, there are some small towns that have larger numbers of local suppliers or customers or educated workers than other small towns, and these towns are still able to attract new firm entrants. Rural economic development strategies that targeted these communities would be more successful than policies that tried to encourage firm entry in every town.
Orazem says, “Since 2000, the only areas that consistently added new firms and increased employment were metropolitan areas. In contrast, the communities losing the most employees and entrepreneurs were towns under 10,000 population. But some of these small towns bucked the trend and were able to continue to attract new firm entry and employment. These small towns were characterized by having atypically large levels of agglomeration and educated labor.”
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