Business Survival in Rural America: A Three‐State Study

Many economists expect that new business survival rates in rural areas ought to be low because of inherent disadvantages of rural economies (e.g. small markets). What little evidence there is in support of this expectation is based on data which is biased toward rural areas. Using unemployment insurance tax records (ES202) for Arkansas, Maine, and North Dakota, the authors calculate and analyze new firm survival rates. Results show that new business survival rates are as high in rural areas as they are in urban areas. Further, survival rates in different industrial sectors are comparable, even when level of urbanization is taken into account. The authors conclude that economists may be overstating the inviability of rural in relation to urban economies.