Learning Entrepreneurship From Other Entrepreneurs?

We document that individuals who grew up in high firms density areas are more likely to become entrepreneurs, given firm density in their current location, and to run businesses in the sector with the highest density when young. Firm density at entrepreneur's young age drives current firm profitability and is more important than current density for business performance. Results hold is a sample of movers, which allows addressing endogeneity concerns. These results are consistent with entrepreneurial skills being partly learnable through social contacts. Accordingly, entrepreneurs who grew up in high firm density areas adopt better managerial practices.