Urban Structure: Its Role in Urban Growth, Net New Business Formation and Industrial Churn

Cities are the “engines of growth” because entrepreneurial and creative activities are concentrated in cities. This suggests that cities grow by hosting new businesses and “churning” industries advantageously. In so doing, cities need to adapt their spatial structure to mitigate negative externalities. Our previous paper (Lee and Gordon 2007) found that the links between urban structure and growth vary across metro size: more clustering in small metros and more dispersion in large metros were associated with faster employment growth. In this paper, we extend our research to investigate to what extent urban spatial structure variables – dispersion and polycentricity – influence net new business formation (NNBF) and industrial “churning” in a cross-section of 79 U.S. metropolitan areas in the 2000s. The results of least squares regression and locally weighted regression analyses are mixed. OLS results for recent years fail to replicate out results for the 1990s. But applying a more powerful LOESS approach does give results for spatial impacts on NNBF and industrial churning that are consistent with the links between spatial structure and urban growth found in the earlier paper. Key-Words: URBAN SPATIAL STRUCTURE, URBAN GROWTH, NET NEW BUSINESS FORMATION (NNBF), INDUSTRIAL CHURN. JEL classification: R1 This research was supported by the Lusk Center for Real Estate at University of Southern California. Forthcoming in http://regionetdeveloppement.org/ * University of Illinois at Urbana-Champaign, [email protected]. ** University of Southern California, [email protected].