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Market-Based Solutions to Vital Economic Issues


Kenan Institute 2024 Grand Challenge: Business Resilience
Market-Based Solutions to Vital Economic Issues
Feb 11, 2022

The Effects of High-skilled Firm Entry on Incumbent Residents


Using 391 high-skilled firm entries in the U.S. from 1990–2010, we estimate the effects of the firm entry on incumbent residents’ consumption, finances, and mobility. We compare outcomes for residents living close to the entry location with those living far away while controlling for their proximity to potential high-skilled firm entry sites. We find high-skilled incumbents, especially homeowners, benefit. Low-skilled incumbents on average benefit less. For a representative firm entry with 1000 new employees entering a metropolitan area with a population of 1.1 million, the aggregate welfare benefit across all incumbents is an annual equivalent of $25 million. Low-skilled renters living within 10 minutes from the entry bear the largest costs.

Note: Research papers posted on SSRN, including any findings, may differ from the final version chosen for publication in academic journals.

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