The Incubator Hypothesis: Evidence from Five Cities

21 Pages Posted: 5 Jan 2007 Last revised: 18 Aug 2022

See all articles by Robert A. Leone

Robert A. Leone

affiliation not provided to SSRN (deceased)

Raymond Struyk

The Urban Institute

Date Written: June 1974

Abstract

The purpose of this paper is to review the past evidence and to offer some new data to assess whether the incubator hypothesis can be empirically supported. In particular the two general aspects of the hypothesis will be tested. First, we will examine the proposition that highly centralized locations are attracting a disproportionate number of new firms and/or the employment associated with new firms. Second, we will test the hypothesis that new firms which are formed in high density areas move outward from such sites in their early years of existence in order to expand their productive activities. We refer to these as the "simple and "dynamic" hypotheses in the rest of the paper. Our analysis is based on the experience of all manufacturers in several U.S. cities. We recognize that it is quite possible that the hypothesis could hold for certain industries even if it is unsupported for all firms together. Our intent, however, is to test the validity of the hypothesis as a general theory of intraurban location behavior. The paper consists of three sections. The first two present evidence on the "simple" and "dynamic" hypotheses. The final section summarizes our findings and offers some conclusions.

Suggested Citation

Leone (deceased), Robert A. and Struyk, Raymond, The Incubator Hypothesis: Evidence from Five Cities (June 1974). NBER Working Paper No. w0045, Available at SSRN: https://ssrn.com/abstract=259355

Robert A. Leone (deceased)

affiliation not provided to SSRN (deceased)

Raymond Struyk (Contact Author)

The Urban Institute

2100 M Street, NW
Washington, DC 20037
United States

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