Publication
"Impact of the Community Reinvestment Act on Small Business Employment in Lower Income Neighborhoods " in Regional Science and Urban Economics, 98, 103837, 2023.
This study examines the impact of the Community Reinvestment Act (CRA) on small business growth in low- and moderate-income (LMI) neighborhoods in the United States. Using rich firm-level panel data on every U.S. employer, I exploit the sharp threshold cutoff for CRA eligibility and changes in CRA eligibility over time to estimate the effects on business employment. I find that the firms located in the CRA eligible areas increase employment by about 0.8 percent compared to firms in CRA ineligible areas, and the effects are larger for young firms and firms in minority neighborhoods, which potentially face higher credit access barriers, increasing employment by about 1.5 and 1.9 percent, respectively. I also find that increases in lending in the CRA areas are related to the number of banks, implying that the channel offers greater access to finance.
“Black Entrepreneurs, Financial Constraints and the Firm Size Gap” (with J. David Brown, John S. Earle, Kyung Min Lee and Jared Wold), in AEA Papers and Proceedings, 112:282-286, 2022.
We document the smaller average employment size and lower financial access of Black-owned businesses compared to White-owned businesses. Controlling for other characteristics, we find that observed differences in finance account for 60 percent of the 11.3 percent racial gap in number of employees; differences in returns account for 103 percent. The results imply that if both the levels and returns on finance were equalized across races, then Black-owned firms would be 18.4 percent larger than their actual size. Equalizing financial factors alone would reverse the firm size gap so that Black-owned firms would be larger than White-owned firms by 7.1 percent.
"African-American Entrepreneurs: Contribution and Challenges" ( with Kyungmin Lee, John S. Earle, Lokesh Dani, Eric Childress, and J. David Brown), in Office of Advocacy, U.S. Small Business Administration, May 2022.
“Does the Community Reinvestment Act Increase Lending to Small Businesses in Lower Income Neighborhoods?” (with Kyung Min Lee and John S. Earle), in Economics Letters, 209, 110146, 2021.
We estimate the impact of the Community Reinvestment Act (CRA) on small business lending in lower-income neighborhoods. Using 2004–2016 panel data on census tracts, we apply a combined regression discontinuity and fixed effect method. We find that the number of small business loans increases by about 3 to 7 percent and the total dollar amount of small business loans by about 6 to 10 percent in tracts becoming treated by the CRA. The results are robust along many dimensions and suggest that the CRA has a positive impact on access to finance for small businesses in lower income areas.
“Immigrant Entrepreneurs and Innovation in the U.S. High-tech Sector” (with J. David Brown, John S. Earle, and Kyung Min Lee) in The Roles of Immigrants and Foreign Students in US Science, Innovation, and Entrepreneurship. University of Chicago Press, 149-171, 2020.
(Featured or cited in Forbes, NBC News, NPR Marketplace Morning Report, Quartz at Work)
We estimate differences in innovation behavior between immigrant- and native-owned firms in the high-tech sector. The data from the Annual Survey of Entrepreneurs comprise a random sample of firms with detailed information on owner characteristics and on innovation. We find uniformly higher rates of innovation in immigrant-owned firms for 24 of 26 different measures; the only exceptions are copyrights and trademarks. The immigrant advantage holds for older firms as well as for recent start-ups and for every level of education. The size of the estimated immigrant-native differences tends to fall in regressions including detailed controls for demographics, human capital, finance, motivations, and industry, but across specifications immigrants retain an advantage in innovation.
“Start-ups, Job Creation, and Founder Characteristics” (with J. David Brown, John S. Earle, and Kyung Min Lee), in Industrial and Corporate Change, 28(6):1637-1672, 2019.
Analyzing data on all US employers in a cohort of entering firms, we document a highly skewed size distribution, such that the largest 5% account for over half of cohort employment at firm birth and more than two-thirds at firm age 7. Analyzing linked survey-administrative data, we find that female, African–American, and younger founders are initially less likely to start large firms. The gender gap persists through firm age 7, while racial and age gaps do not. Education is positively associated with start-up size, except for graduate degrees. Prior entrepreneurship and founding team size are positively associated, but team diversity is not. Specifications with capital and industry controls illuminate roles of financial constraints and sectoral choice.
Working Paper
"Black Entrepreneurs, Job Creation, and Financial Constraints" (with KyungMin Lee, J. David Brown and John S. Earle) IZA Discussion Paper 14403.
"Paid Sick Leave and Influenza Vaccination Take-up" (with Chanup Jeung and Kyungmin Lee), submitted
Research in Progress
“Immigrant Entrepreneurs, Job Creation, and Innovation” (with J. David Brown, John S. Earle, and Kyung Min Lee)
“Gender Gap in Entrepreneurship” (with J. David Brown, John S. Earle, and Kyung Min Lee)
“Entrepreneurial Motivations, Innovation, and Growth: Evidence from the Annual Survey of Entrepreneurs” (with J. David Brown, John S. Earle, and Kyung Min Lee)