Crime's Impact on the Survival Prospects of Young Urban Small Businesses

Abstract

The authors investigate the empirical link between prevailing levels of crime and the viability of small businesses. Using confidential microdata from the U.S. Census Bureau's Characteristics of Business Owners Survey, they find, on balance, that young firms operating in high-crime niches in urban America appear not to be disadvantaged by crime. Crime's impact may certainly be harmful, with other factors being constant, but the crux of the findings is that other factors are not constant. Firms most negatively affected by crime do not appear to be less viable than otherwise identical firms reporting that crime has no effect on their businesses. High-crime niches may in fact be rational choices for some business owners, present and potential.