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on Entrepreneurship |
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Issue of 2013‒06‒09
eight papers chosen by Marcus Dejardin University of Namur and Universite' Catholique de Louvain |
| By: | Bracke, Philippe (London School of Economics); Hilber, Christian (London School of Economics); Silva, Olmo (London School of Economics) |
| Abstract: | We study the link between homeownership and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit a fixed budget to mortgage payments. Our model predicts that: (i) mortgage commitments, by amplifying risk aversion, diminish the likelihood that homeowners start a business; (ii) the negative link between homeownership and entrepreneurship is increasing in mortgage debt; and (iii) the negative relation is more pronounced for entrepreneurs in risky sectors. Exploiting the longitudinal dimension of the British Household Panel Survey to control for unobservables, we test and confirm these predictions. Leveraged home-buyers are 30% less likely to become entrepreneurs. |
| Keywords: | entrepreneurship, homeownership, commitment |
| JEL: | L26 D14 G11 R21 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:iza:izadps:dp7417&r=ent |
| By: | Jonathan E. Goldberg |
| Abstract: | I study the effects of credit tightening in an economy with uninsured idiosyncratic investment risk. In the model, entrepreneurs require an equity premium because collateral constraints limit insurance. After collateral constraints tighten, the equity premium and the riskiness of consumption rise and the risk-free interest rate falls. I show that, both immediately after the shock and in the long run, the equity premium and the riskiness of consumption increase more than they would if the risk-free rate were constant. Indeed, the long-run increase in the riskiness of consumption growth is purely a general-equilibrium effect: if the risk-free rate were constant (as in a small open economy), an endogenous decrease in risk-taking by entrepreneurs would, in the long run, completely offset the decrease in their ability to diversify. I also show that the credit shock leads to a decrease in aggregate capital if the elasticity of intertemporal substitution is sufficiently high. Finally, I show that, due to a general-equilibrium effect, there is no "overshooting" in the equity premium: in response to a permanent decrease in firms' ability to pledge their future income, the equity premium immediately jumps to its new steady-state level and remains constant thereafter, even as aggregate capital adjusts over time. However, if idiosyncratic uncertainty is sufficiently low, credit tightening has no short- or long-run effects on aggregate capital, the equity premium, or the riskiness of consumption. Thus my paper highlights how investment risk affects the economy's response to a credit crunch. |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2013-31&r=ent |
| By: | BABA Ryota; MOTOHASHI Kazuyuki |
| Abstract: | Entrepreneurship activities are low in Japan, and it is often discussed that possible reasons are the lack of venture capital and a rigid labor market. However, it is rare to find a study that analyzes the human capital aspect of entrepreneurs based on a large scale sample survey. In this study, the characteristics of the human capital of entrepreneurs, such as education and job experience, are analyzed based on a survey of entrepreneurs conducted by the Research Institute of Economy, Trade and Industry (RIETI) in 2012. The entire process of entrepreneurship is divided into three phases—(1) planning, (2) execution, and (3) achieving success in business—and the determinants of each step, not only the education and job background, but also personal relationships with the entrepreneur and his/her personality, are investigated. It is found that broad experiences while attending universities such as extra-curriculum activities are an important factor at the planning and execution stage. In contrast, broader job experiences but within a limited number of companies can explain the probability of entrepreneurship success well. Therefore, promotion of entrepreneurship activity in Japan including forming a spin-off company requires both a variety of extra-curriculum activities experienced at universities and facilitating employees to develop broad professional experiences. |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:13049&r=ent |
| By: | Braunerhjelm, Pontus (Entrepreneurship Forum, CESIS, KTH); Eklund, Johan E. (Entrepreneurship Forum, JIBS) |
| Abstract: | This paper examines the tax administrative burden and its effect on new firm formation. It is well recognized that entrepreneurship and new firm formation are critical factors in determining economic growth and development. New firm entry into the marketplace enhances welfare in two distinct ways: 1) by promoting innovation, productivity and economic growth and 2) by increasing competition, which lowers prices and expands output. It is also well documented that barriers to entry reduce the likelihood that new firms will enter various sectors. We argue that the burden imposed by tax codes and tax compliance constitutes a barrier to entry that has been neglected in the previous literature. We use data from the World Bank to measure the administrative burden that the complexity of tax policy imposes on new firm. Additionally, we use a measure of new firm formation—entry density. Our data cover 118 countries over a period of six years. We find that the entry rate is significantly reduced by the tax administrative burden and that this effect is unrelated to general taxes on corporate profits and is robust to the inclusion of several important control variables. |
| Keywords: | tax administrative burden; entry; entrepreneurship; new firm formation; regulations; tax policy |
| JEL: | D22 H20 K20 L26 L51 |
| Date: | 2013–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:cesisp:0312&r=ent |
| By: | Nadine Levratto; Aziza Garsaa; Luc Tessier |
| Abstract: | Targeted reductions in employers' social security contributions are conceived as a key policy instrument used to facilitate job creation when labour cost is so high that it may deter companies from hiring new employees. Among the different measures implemented in France, the set of instruments implemented in the West Indian departements (or administrative regions) is the most accomplished form as the rates of exemption as well as the base and scope of these measures have reached their maximum there. This paper seeks to determine to what extent these instruments contribute to job creation looking at the growth rate in the number of employees through the use of a balanced panel of business entities with at least one employee, drawn from a matching between several administrative data sources from 2004 to 2011. We studied the differentiated effects of the payroll tax using a quantile regression for panel data estimation technique. We show that the impact of the exemption rate and of the intensity of use of the various measures on changes in the number of employees differ according to the establishment growth rate. They tend to be negative on the left side of the distribution and positive on the right side. However,these effects may significantly differ according to the size class and the industry in which the business operates. Large ones tend to be advantaged compared to the ones whose total number of employees is fewer than eleven, whereas the estimated correlation between growth and exemption rate is higher for most of the entities in the manufacturing industry but only for a small part of those in business services. |
| Keywords: | firm growth, job creation, reduced social security contributions, labour cost, quantile estimations on panel data |
| JEL: | C14 J3 J38 L25 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:drm:wpaper:2013-15&r=ent |
| By: | Tristan Boyer; Regis Blazy |
| Abstract: | Based on French data describing the characteristics of the entrepreneurs and their project, this paper studies the differences between the determinants of survival for innovative and non-innovative micro-enterprises. We show that the survival of innovative and non-innovative enterprises is linked to personal criteria such as age, gender, minority, professional experience and financing sources. Our results also highlight the positive effect of not being alone in the start-up design phase, whereas being involved in a business network after the start-up period has no significant influence. The survival time of innovative enterprises, which is significantly lower than that of the non-innovative ones, seems adversely influenced by the entrepreneur’s previous management experience. Finally, when considering both innovative and non-innovative start-ups, there appears to be a type of “pecking order” as bank financing has a much more positive effect on survival than a personal one, albeit when focusing solely on innovative ones this difference does not exist. |
| Keywords: | entrepreneur, innovation, micro-enterprise, survival, pecking order. |
| JEL: | L26 |
| Date: | 2013–05 |
| URL: | http://d.repec.org/n?u=RePEc:ipg:wpaper:12&r=ent |
| By: | Tina Wolf (Friedrich Schiller University Jena, DFG RTG 1411 The Economics of Innovative Change) |
| Abstract: | There already exists broad literature investigating small and innovative firms in many respects. However, there have been few attempts to assess this group of firms' propensity to patent or its patenting activities. This paper intends to fill that gap. By applying a new approach to account for young and innovative companies' patents, this paper avoids an undercounting of small firm patenting, which has been a feature of most of the earlier studies. A data set is used that comprises information on R&D, capital stock, state promotion etc for 534 Thuringian firms in their first three business years. The results of the zero-inflated negative binomial regression analysis suggest that patenting is an activity of science-oriented, cooperative young firms that are conducting R&D even before the firm has been launched. |
| Keywords: | entrepreneurship, technological innovation, patenting, firm performance, research and development |
| JEL: | L25 L26 Q55 |
| Date: | 2013–05–27 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2013-023&r=ent |
| By: | Marcén, Miriam |
| Abstract: | This work examines the effect of cultural differences on self-employment. All the individuals considered in the analysis are second-generation immigrants who were born and live under the same laws and institutions in the US. Following an epidemiological approach, the variation in self-employment rates by ancestors’ national origin can be considered as supporting evidence of the effect of culture on self-employment. Our results show that culture has quantitatively significant effects on self-employment. This finding is robust to alternative specifications and to the introduction of several controls. Additional analysis shows that there are differences in the impact of culture on self-employment by gender, in that men are more sensitive than women to culture; and by economic activity, in that those individuals involved in professional, scientific, and technical activities, and those in accommodation and food service activities, are more affected by the impact of cultural differences. We also examine the transmission of culture, observing an important role of the inter-generational transfer of culture, although the impact of culture on self-employment diminishes from generation to generation. |
| Keywords: | Self-Employment, Culture |
| JEL: | J10 J20 J61 Z1 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:47338&r=ent |