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Examples of such shocks include breakthroughs in biotech that spurred startup formation in San Diego and Philadelphia. Overall, these shocks explain half of the forecast error variance of startup job creation, accounting for 40% of population growth and long\u2010run changes in employment. Shocks to barriers to firm entry have economy\u2010wide effects similar to those of startup productivity shocks but operate largely through the number of startups, rather than their size. We use a novel spatial panel vector autoregression, identifying shocks using shift\u2013share external instruments.<\/jats:p>","DOI":"10.1002\/jae.2783","type":"journal-article","created":{"date-parts":[[2020,6,5]],"date-time":"2020-06-05T00:24:34Z","timestamp":1591316674000},"page":"751-775","update-policy":"http:\/\/dx.doi.org\/10.1002\/crossmark_policy","source":"Crossref","is-referenced-by-count":3,"title":["The role of startups for local labor markets"],"prefix":"10.1002","volume":"35","author":[{"given":"Gerald","family":"Carlino","sequence":"first","affiliation":[{"name":"Research Department Federal Reserve Bank of Philadelphia  Philadelphia Pennsylvania"}],"role":[{"role":"author","vocabulary":"crossref"}]},{"given":"Thorsten","family":"Drautzburg","sequence":"additional","affiliation":[{"name":"Research Department Federal Reserve Bank of Philadelphia  Philadelphia Pennsylvania"}],"role":[{"role":"author","vocabulary":"crossref"}]}],"member":"311","published-online":{"date-parts":[[2020,7,8]]},"reference":[{"key":"e_1_2_9_2_1","doi-asserted-by":"crossref","unstructured":"Adelino M. 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