Essays in Entrepreneurship and Public Economics

This dissertation consists of three essays in entrepreneurship and public economics.;Universities are believed to be important drivers of local economic growth. The first essay identifies the extent to which U.S. universities stimulate nearby economic activity using the interaction of a national shock to the spread of innovation from universities---the Bayh-Dole Act of 1980---with pre-determined variation both within a university in academic strengths and across universities in federal research funding. I find that long-run employment and payroll per worker around universities rise particularly rapidly after Bayh-Dole in industries more closely related to local university innovative strengths. The impact of university innovation increases with geographic proximity to the university. Entering establishments---in particular multi-unit firm expansions---over the period from 1977 to 1997 were especially important in generating long-run employment growth, while incumbents experienced modest declines, consistent with creative destruction. Suggestive of their complementarities with universities, large establishments contributed more substantially to the total 20 year growth effect than did small establishments.;The second essay measures capital gains tax lock-in for household portfolios and estimates the deadweight cost of this behavioral response. Taxes inhibit about one-fourth of the rebalancing in which households would otherwise engage, resulting in a simulated excess burden of 10--25% of revenue for the median household.;The third essay evaluates a common argument in the US health policy debate that rising health insurance costs, coupled with the tying of insurance to employers, inhibits the survival and growth of entrepreneurial firms. Economic theory suggests that these costs may indeed adversely affect small businesses: the firms may be unable to pass on to employees the full cost of benefits due to downward nominal wage rigidities or labor market competition with large firms. Instrumenting for premium growth in multiple ways, I can rule out large negative effects of rising health costs on firm survival and employment growth. I also find that firms facing higher growth in health costs are more likely to offer insurance, possibly due to the higher value of insurance when potential loss rises.