Download or read book Liquidity Constraints Household Wealth and Self Employment written by Julie M. Zissimopoulos and published by . This book was released on 2010 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Evidence of liquidity constraints affecting entrepreneurship includes increasing rates of business formation with increases in household wealth and no relationship between the likelihood of business formation and wealth at high wealth levels. Using longitudinal data from the Health and Retirement Study on workers over age 50 and employing probit regressions with a non-linear specification of household wealth and liquid wealth, the authors find the relationship between wealth and business formation is consistent with this pattern. The paper also finds that wealth matters more for the formation of businesses requiring high starting capital. Employing the availability of a lump-sum distribution option (LSO) of an employer-provided pension plan as a new proxy for liquidity, the results show that workers with an LSO are more likely than workers with a pension and without an LSO to transition into self-employment. This provides further evidence of the existence and importance of liquidity constraints.
Download or read book Liquidity Constraints Household Wealth and Entrepreneurship Revisited written by Robert W. Fairlie and published by . This book was released on 2014 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The existence of liquidity constraints for entrepreneurs has been challenged by the finding that business entry rates are invariant throughout most of the asset distribution and increase dramatically only at the top of this distribution. We reexamine the liquidity constraint hypothesis in three ways. First, we separately examine those who do and those who do not experience a job loss to reveal#generally increasing entry rates through the wealth distribution for both groups, and show why these groups should be separately analyzed. Second, we use a two-period simulation of the Evans and Jovanovic model to shows how exogenous wealth shocks can accurately identify the presence of liquidity constraints. Third, we provide new evidence from matched Current Population#Survey data to show that housing appreciation measured at the MSA-level is a significantly positive - determinant of entry into self-employment, after controlling for changes in local economic conditions.
Download or read book Liquidity Constraints Household Wealth and Entrepreneurship Revisited written by Robert W. Fairlie and published by . This book was released on 2006 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Self employment and Liquidity Constraints written by Edvard Johansson and published by . This book was released on 1998 with total page 20 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Liquidity Constraints Matter for New Entrepreneurs written by Kevin Moore and published by . This book was released on 2004 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Numerous studies have found a positive relationship between wealth and entering entrepreneurship, and interpret this as evidence of the existence of liquidity constraints. However, recent research has shown that the relationship between wealth and entering entrepreneurship may be non-linear and only significant for high-wealth households; this result cannot be interpreted as evidence of liquidity constraints. Using data from the SCF, we construct a proxy for wealth based on the household's home equity wealth at the time of the entrepreneurial decision. The results provide further evidence that the relationship between wealth and entering entrepreneurship is only significant for high-wealth households and that liquidity constraints do not appear to bind for the majority of new entrepreneurs. Possible explanations for the relationship between wealth and becoming an entrepreneur include lower risk aversion and differences in the types of businesses started by high-wealth households"--Federal Reserve Board web site.
Download or read book Liquidity Constraints Household Wealth and Entrepreneurship written by Erik Hurst and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The propensity to become a business owner is a nonlinear function of wealth.The relationship between wealth and entry into entrepreneurship is essentially flat over the majority of the wealth distribution.It is only at the top of the wealth distribution--after the ninety-fifth percentile--that a positive relationship can be found. Segmenting businesses into industries with high-- and low--starting capital requirements, we find no evidence that wealth matters more for businesses requiring higher initial capital.When using inheritances as an instrument for wealth, we find that both past and future inheritances predict current business entry, showing that inheritances capture more than simply liquidity.We further exploit the regional variation in house prices and find that households that lived in regions in which housing prices appreciated strongly were no more likely to start a business than households in other regions.(Publication abstract).
Download or read book Is Inequality Bad for Business written by Alice Mesnard and published by World Bank Publications. This book was released on 2001 with total page 34 pages. Available in PDF, EPUB and Kindle. Book excerpt: Data on occupational choice among return migrants in Tunisia reveal that higher inequality of wealth reduces the level of new business activity. The effect is not large, however. Even dramatic redistributions of wealth would not provide much stimulus to entrepreneurship.
Download or read book Measuring Entrepreneurial Businesses written by John Haltiwanger and published by University of Chicago Press. This book was released on 2017-09-21 with total page 488 pages. Available in PDF, EPUB and Kindle. Book excerpt: Measuring Entrepreneurial Businesses: Current Knowledge and Challenges brings together and unprecedented group of economists, data providers, and data analysts to discuss research on the state of entrepreneurship and to address the challenges in understanding this dynamic part of the economy. Each chapter addresses the challenges of measuring entrepreneurship and how entrepreneurial firms contribute to economies and standards of living. The book also investigates heterogeneity in entrepreneurs, challenges experienced by entrepreneurs over time, and how much less we know than we think about entrepreneurship given data limitations. This volume will be a groundbreaking first serious look into entrepreneurship in the NBER's Income and Wealth series.
Download or read book Wealth Distribution and Self employment in a Developing Economy written by Alice Mesnard and published by . This book was released on 2001 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Do Liquidity Constraints Matter for New Entrepreneurs written by Kevin B. Moore and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: "Numerous studies have found a positive relationship between wealth and entering entrepreneurship, and interpret this as evidence of the existence of liquidity constraints. However, recent research has shown that the relationship between wealth and entering entrepreneurship may be non-linear and only significant for high-wealth households; this result cannot be interpreted as evidence of liquidity constraints. Using data from the SCF, we construct a proxy for wealth based on the household's home equity wealth at the time of the entrepreneurial decision. The results provide further evidence that the relationship between wealth and entering entrepreneurship is only significant for high-wealth households and that liquidity constraints do not appear to bind for the majority of new entrepreneurs. Possible explanations for the relationship between wealth and becoming an entrepreneur include lower risk aversion and differences in the types of businesses started by high-wealth households"--Federal Reserve Board web site.
Download or read book Liquidity Constraints and Occupational Choice written by Mariassunta Giannetti and published by . This book was released on 2010 with total page 16 pages. Available in PDF, EPUB and Kindle. Book excerpt: I show that liquidity constraints are related to individuals' occupational choice. A proxy for the prospect of becoming liquidity constrained affects negatively the probability of being self-employed as opposed to being employed in the private or the public sectors. Furthermore, individuals with higher probability of facing liquidity constraints are more likely to be employed in the public sector, which offers the highest level of job and income security, instead of being employed in the private sector.
Download or read book Do Household Savings Encourage Entrepreneurship Household Wealth Parental Wealth and the Transition in and Out of Entrepreneurship written by Erik Hurst and published by . This book was released on 2015 with total page 25 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using data from three different surveys, we report several important facts about entrepreneurship and household savings. Moreover, we show that the propensity to become a business owner in the United States is a non-linear function of wealth. The relationship between wealth and entry into entrepreneurship is essentially flat over the majority of the wealth distribution. It is only at the top of the wealth distribution - after the 95th percentile - that a positive relationship can be found. Segmenting businesses into industries with high and low starting capital requirements, we find no evidence that wealth matters more for businesses requiring higher initial capital. We also exploit the regional variation in house prices as an instrument for liquidity. Households who lived in regions where housing prices appreciated strongly were no more likely to start a business than households in other regions. Not only household wealth but also parental wealth has not effect on business formation. Moreover, wealth has no effect on business survival. Thus, while liquidity constraints may be important for some households, they are not a major impediment to small business formation and business success in the United States.
Download or read book The Cost of Failure written by Troy R. Harting and published by . This book was released on 2005 with total page 272 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Precautionary Savings and the Importance of Business Owners written by Erik Hurst and published by . This book was released on 2005 with total page 74 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we show the pivotal role business owners play in estimating the importance of the precautionary saving motive. Since business owners hold larger amounts of wealth than other households for non-precautionary reasons and also face highly volatile income, they induce a correlation between wealth and income risk regardless of whether or not a precautionary saving motive exists. Using data from the Panel Study of Income Dynamics in the 1980s and the 1990s, we show that among both business owners and non-business owners, the size of precautionary savings with respect to labor income risk is modest and accounts for less than ten percent of total household wealth. However, pooling together the two groups leads to an artificially high estimate of the importance of precautionary savings. New data from the Survey of Consumer Finances further confirms that precautionary savings account for less than ten percent of total wealth for both business owners and non-business owners. Thus, while a precautionary saving motive exists and affects all households, it does not give rise to high amounts of wealth in the economy, particularly among those households who face the most volatile stream of income.
Download or read book Is Inequality Bad for Business A Nonlinear Microeconomic Model of Wealth Effects on Self Employment written by Martin Ravallion and published by . This book was released on 1999 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: January 2001 Data on occupational choice among return migrants in Tunisia reveal that higher inequality of wealth reduces the level of new business activity. The effect is not large, however. Even dramatic redistributions of wealth would not provide much stimulus to entrepreneurship. It is widely assumed that pervasive credit market failures mean that a person's current wealth is critical to whether or not that person takes up opportunities to start a new business. Mesnard and Ravallion show that inequality in wealth can be either good or bad for the level of entrepreneurship in an economy, depending on how diminishing returns to capital interact with borrowing constraints at the microeconomic level. They use nonparametric regression methods to study wealth effects on business start-ups among migrants returning to their home country, Tunisia. They include controls for heterogeneity, with specification tests for the nonseparable effects with wealth and for selection bias. There is no evidence of increasing returns at low wealth. The aggregate number of business start-ups is an increasing function of aggregate wealth but a decreasing function of wealth inequality. In other words, at any given mean, the higher the initial inequality of wealth, the lower the rate of new business start-ups, through the existence of diminishing returns to capital given liquidity constraints. In this sense, the results suggest that inequality is bad for business--but the size of this effect is small. The findings do not constitute a case for public redistribution of wealth as a means of stimulating business activity. There should probably be more research on interventions to reduce liquidity constraints. This paper--a product of Poverty and Human Resources, Development Research Group--is part of a larger effort in the group to understand how the distribution of wealth in an economy influences macroeconomic activity and occupational structure. Martin Ravallion may be contacted at [email protected].
Download or read book A Dynamic Model of Choice Between Wage work and Self employment with Liquidity Constraints written by Thierry Magnac and published by . This book was released on 1990 with total page 44 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Download or read book Entrepreneurship Self Employment and Retirement written by N. Sappleton and published by Springer. This book was released on 2015-04-16 with total page 278 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents a collection of nine studies which contribute to a more robust and richer understanding of entrepreneurship, self-employment and retirement in a diversity of settings, including the Netherlands, Canada, the United Kingdom, Singapore and the US, by drawing on both qualitative and quantitative data.
