The Art of Entrepreneurship: Artist Clusters and Startup Births in NYC

This paper investigates whether the geographic concentration of artists affects start up formation within New York City. Using annual data at ZIP Code Tabulation Areas (ZIPCTAs) level from 2011 to 2018, we construct a location-quotient measure of artist agglomeration from the American Community Survey and estimate its impact on the number of startups founded each year. Ordinary-leastsquares shows a positive association, but to address endogeneity we implement a two-stage least-squares strategy. The instrument is a shift–share based on each ZIPCTA’s 1940 share of the city’s artists interacted with the change in the total number of artists city-wide since 2011. IV estimates indicate that a one-unit increase in the artist location quotient raises annual startup formation by roughly 36 percent, considerably larger than the attenuated OLS effect (12 percent). Results are robust to extensive socio-economic, business-environment and amenity controls, to Oster (2019) coefficient-stability tests and to a bunch of robustness checks. The findings suggest that exposure to creative milieus does affect the local entrepreneurial dynamism.