Business Dynamics on American Indian Reservations: Evidence from Longitudinal Datasets

Abstract

We use confidential U.S. Census Bureau data to analyze the difference in business establishment dynamics by geographic location on or off of American Indian reservations over the period of the Great Recession and subsequent recovery (2007–2016). We geocoded the U.S. Census Bureau’s Longitudinal Business Database, a dataset with records of all employer business establishments in the United States, for location in an American Indian Reservation and used it to examine whether there are differences in business-establishment survival rates over time by virtue of their location. We find that business establishments located on American Indian reservations have higher survival rates than establishments located in comparable counties. These results are particularly strong for the education, arts and entertainment, wholesale and retail, and public administration industries. While we are not fully able to explain this result, it is consistent with the business establishments being positively selected with respect to survival given the large obstacles necessary to start a business on a reservation in the first place. Alternatively, there may be certain safeguards in a reservation economy that protect business establishments from external economic shocks.