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on Entrepreneurship |
| By: | Gaillard, Alexandre; Kankanamge, Sumudu |
| Abstract: | We evaluate the effects of unemployment insurance variations in a general equilibrium occupational choice model of entrepreneurship. We establish that the occupational flow from unemployment to entrepreneurship is remarkably sensitive to unemployment insurance generosity, corroborating our empirical findings. Beyond direct effects on unemployment, we find large reallocations between employment and entrepreneurship relative to changes in generosity. They contribute to an empirically consistent stable aggregate employment rate, despite increasing unemployment. We show that an insurance coverage effect, i.e. a change in the relative riskiness between occupations with respect to generosity, is a key driver of our results. |
| Keywords: | Entrepreneurship; Unemployment Insurance; Labor Market Mobility |
| JEL: | E24 J65 E61 |
| Date: | 2021–02–08 |
| URL: | http://d.repec.org/n?u=RePEc:tse:wpaper:125253&r=all |
| By: | Pedro Bento (Texas A&M University, Department of Economics) |
| Abstract: | The number of women-owned businesses in the U.S. has soared over the last several decades, even compared to the rise in female labor market participation. In 1982 less than 9 percent of working women owned businesses, compared to over 17 percent of men. By 2012 more than 18 percent of women owned businesses while the analogous rate for men only slightly increased to almost 20 percent. This and other evidence suggests that women have faced significant barriers to starting and running businesses and these barriers have been declining over time. I examine the impact of these trends on aggregate output and the welfare of women and men in the labor force. Interpreted through the lens of a model of entrepreneurship, observed trends imply substantial declines in several barriers facing female entrepreneurs. Together, these changes account for over 12 percent of observed growth in aggregate output, a 3 percent decrease in men's welfare, and an 18 percent increase in the welfare of women since 1982. These impacts are in addition to any gains to workers from declining labor market barriers. |
| Keywords: | women, entrepreneurship, business dynamism, misallocation, aggregate productivity, economic growth. |
| JEL: | E02 E1 J7 O1 O4 |
| Date: | 2020–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:txm:wpaper:20201201-001&r=all |
| By: | Daniel Graeber (DIW Berlin, University of Potsdam); Alexander S. Kritikos (DIW Berlin, University of Potsdam); Johannes Seebauer (DIW Berlin, Freie Universität Berlin) |
| Abstract: | We investigate how the economic consequences of the pandemic, and of the government-mandated measures to contain its spread, affect the self-employed – particularly women – in Germany. For our analysis, we use representative, real-time survey data in which respondents were asked about their situation during the COVID-19 pandemic. Our findings indicate that among the self-employed, who generally face a higher likelihood of income losses due to COVID-19 than employees, women are 35% more likely to experience income losses than their male counterparts. Conversely, we do not find a comparable gender gap among employees. Our results further suggest that the gender gap among the self-employed is largely explained by the fact that women disproportionately work in industries that are more severely affected by the COVID-19 pandemic. Our analysis of potential mechanisms reveals that women are significantly more likely to be impacted by government-imposed restrictions, i.e. the regulation of opening hours. We conclude that future policy measures intending to mitigate the consequences of such shocks should account for this considerable variation in economic hardship. |
| Keywords: | self-employed, COVID-19, income, gender, representative real-time survey data, decomposition methods |
| JEL: | J16 L26 J31 J71 I18 |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:pot:cepadp:27&r=all |
| By: | Pierre-Olivier Gourinchas; Sebnem Kalemli-Ozcan; Veronika Penciakova; Nick Sander |
| Abstract: | This paper assesses the prospects of a 2021 time bomb in small and medium-sized enterprises (SME) failures triggered by the generous support policies enacted during the 2020 COVID-19 crisis. Policies implemented in 2020, on their own, do not create a 2021 time bomb for SMEs. Rather, business failures and policy costs remain modest. By contrast, credit contraction poses significant risk. Such a contraction would disproportionately affect firms that could have survived COVID-19 in 2020 without any fiscal support. Even in that scenario, most business failures would not arise from excessively generous 2020 policies but rather from the contraction of credit to the corporate sector. |
| Keywords: | business formation; entrepreneurship; business dynamism; recessions |
| JEL: | L26 E32 M21 |
| Date: | 2021–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:90076&r=all |
| By: | David, Alexandra; Schäfer, Susann; Terstriep, Judith |
| Abstract: | We identified three major characteristics of migrant entrepreneurs at the individual and organisational level: risk-taking and bricolage attitude, making extensive use of social and cultural capital, and transnational embeddedness. Perseverance and creativity not only prompt entrepreneurs to set up a business faster but possibly better cope with exogenous shocks and resulting uncertainty. Being embedded and acting in various transnational and socio-cultural settings allows them to access additional resources, including specific knowledge, experiences, and cultures, to use for business stabilisation. Based on concrete experiences of crises at the time of flight or migration specific behaviours and virtues emerge that may have a lasting impact on understanding and dealing with wicked situations such as the COVID-19 crisis. The joint project ReCOVery - Resilience of Migrant Entrepreneurs during the COVID-19 crises centres on the ability of migrant entrepreneurs to cope with the current crisis. |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iatfor:012021&r=all |
| By: | PERIANEZ FORTE Inmaculada (European Commission - JRC); WILSON James |
| Abstract: | This policy insight focuses on the tools and mechanisms used by countries and regions to foster efficient entrepreneurial discovery processes (EDP), within their smart specialisation strategies. How this interactive process should be stimulated and organised remains highly context-dependent. There seem to be a significant heterogeneity across entrepreneurial discovery processes and within entrepreneurial discovery processes themselves. Existing institutions, culture and historical trajectory of innovation policy influence the ways countries and regions organise their entrepreneurial discovery processes. The ambiguity around the entrepreneurial discovery process, in theory and practice, stems from the diverse interpretations that can be made of what the desired process should look like, and from the diverse regional contexts in which it is to be implemented. To organise successful entrepreneurial discovery processes we suggest focusing on interventions that: (i) design/implement mechanisms around the specificities of the regional context; (ii) re-consider using digital forms of engagement; (iii) increase the use of communication and dissemination tools. |
| Keywords: | Smart specialisation, entrepreneurial discovery processes (EDP) |
| Date: | 2021–02 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc124101&r=all |
| By: | LARANJA Manuel; Anabela Santos (European Commission - JRC); EDWARDS John; FORAY Dominique |
| Abstract: | The "Entrepreneurial Discovery Process" is a key element of Smart Specialisation Strategy, referring to stakeholder involvement in policy design to 'discover' and identify new or existing priorities for innovation investment, based on region strengths and market trends. However, studies have revealed that this principle has been one of the most demanding for regions (or countries) to implement, and such interaction between stakeholders has been even more challenging in times of physical distancing, as the result of the COVID-19 pandemic. The present report aims to present the lessons learned through the pilot actions conducted with the Alentejo and Algarve regions of Portugal for prototyping online events to support the "Entrepreneurial Discovery Process". The pilots provide the opportunity to design and test whether online workshops could be used to support EDP more widely, and what adaptations would be needed for a new online context. For both events the objective was to stimulate regional actors to participate in an initial exploration of relevant thematic areas, in order to define them as possible priority domains for the next Smart Specialisation cycle. Participating actors in both regions were invited to participate, share experiences, identify obstacles, and suggest solutions to strengthen the innovative capacity of the region in these thematic areas. Hence the events were prepared to bring together a range of actors in the territory, from business, research, and the public administration to discuss issues relevant to their regional strategies. This report sets out the lessons learned from this experience with organising and participating on online events to support EDP can be divided in before-the-event, during-the-event and after-the-event. Furthermore, an ex post online survey to participants also revealed an overall high satisfaction from the participants and that the EDP online events were welcomed by the large majority of participants. For future similar events associated with the EDP process, participants expressed their preference for a mixed format, where physical meetings could (if possible) be used to complement online meetings. Altogether, such findings suggest that re-thinking the support of "Entrepreneurial Discovery Process" and adopting a digital approach can ensure not only the continuity of the policy process in difficult times but can also be a way to improve the participation in the governance model in the post-corona crisis. |
| Keywords: | COVID-19; Entrepreneurial Discovery Process; On-line event; Portugal |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:iptwpa:jrc123818&r=all |
| By: | Loukas Balafoutas (University of Innsbruck); Mongoljin Batsaikhan (Georgetown University in Qatar); Matthias Sutter (Max Planck Institute for Research on Collective Goods, University of Cologne, University of Innsbruck, IZA, and CESifo) |
| Abstract: | We measure the willingness to compete of entrepreneurs and salaried workers in an experiment. We let participants choose between a piece-rate and a tournament scheme either in private or in public. We find that in the private condition entrepreneurs are less competitive than salaried workers, but that in the public condition this ordering is reversed. Data from a follow-up survey suggest that social image concerns of entrepreneurs and perceived norms can explain why entrepreneurs are more competitive when decisions are publicly observable. Our survey also reveals that more competitive entrepreneurs earn higher profits in their businesses. |
| Keywords: | Competitiveness, Entrepreneurs, Salaried Workers, Profits, Field Behavior, Experiment |
| JEL: | C91 C93 D01 L26 |
| Date: | 2021–03–05 |
| URL: | http://d.repec.org/n?u=RePEc:mpg:wpaper:2021_07&r=all |
| By: | Pavlova, Elitsa; Signore, Simone |
| Abstract: | We use competing risks methods to investigate the causal link between venture capital (VC) investments supported by the EIF and the exit prospects and patenting activity of young and innovative firms. Using a novel dataset covering European start-ups receiving VC financing in the years 2007 to 2014, we generate a counterfactual group of non-VC-backed young and innovative firms via a combination of exact and propensity score matching. To offset the limited set of observables allowed by our data, we introduce novel measures based on machine learning, network theory, and satellite imagery analysis to estimate treatment propensity. Our estimates indicate that start-ups receiving EIF VC experienced a significant threefold increase in their likelihood to exit via M&A. We find a similarly large effect in the case of IPO, albeit only weakly significant. Moreover, we find that EIF VC contributed to a 13 percentage points higher incidence in patenting activity during the five years following the investment date. Overall, our work provides meaningful evidence towards the positive effects of EIF's VC activity on the exit prospects and innovative capacity of young and innovative businesses in Europe. |
| Keywords: | EIF,venture capital,public intervention,exit strategy,innovation,start-ups,machine learning,geospatial analysis,network theory |
| JEL: | G24 G34 M13 O32 O38 |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:eifwps:202170&r=all |
| By: | Lambert, Derek (Central Bank of Ireland); McCann, Fergal (Central Bank of Ireland); McQuinn, John (Central Bank of Ireland); Myers, Samantha (Central Bank of Ireland); Yao, Fang (Central Bank of Ireland) |
| Abstract: | We update estimates of aggregate revenue shortfalls due to COVID-19 in the Irish Small and Medium Enterprise (SME) sector for the full year 2020. Acknowledging heightened uncertainty, we estimate shortfalls of between €10.3bn and €11.7bn, based on reported reductions in firms’ costs (including wage support take-up) and revenues since March, and macroeconomic projections. In aggregate these shortfalls will be met by a combination of utilisation of pre-existing SME cash reserves, draw-downs of existing credit commitments, new borrowing, government non-wage grants and reliefs, guaranteed loans and loss-sharing where payments have been missed. In cases where these options are insufficient, shortfalls may also lead to the closure of firms. We review recent debates on the relative merits of debt, grants and equity-like support mechanisms, and conclude with results from a model of SME financial distress. The model assesses SMEs’ capacity to meet operating losses with cash or to service interest on bank debt, analysing the role of policy supports in mitigating these risks. The current policy support package, including elements related to both wage and non-wage costs, lowers the rate of financial distress by one-sixth. Encouragingly from a financial stability standpoint, the effect of current policy is larger when focussing on debt balances, reducing the financial distress rate by two-fifths. These results point to the importance of non-financial support policies, including those aimed at restructuring of liabilities of distressed enterprises, in the current environment. |
| Date: | 2020–10 |
| URL: | http://d.repec.org/n?u=RePEc:cbi:fsnote:8/fs/20&r=all |
| By: | Emin M. Dinlersoz; Timothy Dunne; John Haltiwanger; Veronika Penciakova |
| Abstract: | The trajectory of new business applications and transitions to employer businesses differ markedly during the Great Recession and the COVID-19 recession. Both applications and transitions to employer startups decreased slowly but persistently in the post-Lehman crisis period of the Great Recession. In contrast, during the COVID-19 recession new applications initially declined but have since sharply rebounded, resulting in a surge in applications during 2020. Projected transitions to employer businesses also rise, but this projection is dampened by a change in the composition of applications in 2020 toward applications that are more likely to be nonemployers. |
| Keywords: | COVID-19; business failures; liquidity; small business |
| JEL: | D2 E65 G33 |
| Date: | 2021–01–29 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedawp:90075&r=all |
| By: | Enrique Alaniz; T. H. Gindling; Catherine Mata; Diego Rojas |
| Abstract: | Informal work is often considered a place of employment for marginalized and vulnerable workers who have been rationed out of preferred formal work. However, informality can also be seen as a dynamic sector that budding entrepreneurs and those looking for flexible working conditions enter voluntarily. We use the methodology developed in Günther and Launov (2012) to test for the voluntary and involuntary nature of informal work in Nicaragua and Costa Rica, without making ad hoc assumptions about labour market segmentation and self-selection. |
| Keywords: | Informality, Developing countries, Costa Rica, Nicaragua, Informal work, Labour market segmentation, Self-selection |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-50&r=all |
| By: | A. R. Baghirzade; B. Kushbakov |
| Abstract: | Nowadays there are a lot of creative and innovative ideas of business start-ups or various projects starting from a novel or music album and finishing with some innovative goods or website that makes our life better and easier. Unfortunately, young people often do not have enough financial support to bring their ideas to life. The best way to solve particular problem is to use crowdfunding platforms. Crowdfunding itself is a way of financing a project by raising money from a crowd or simply large number of people. It is believed that crowdfunding term appeared at the same time as crowdsourcing in 2006. Its author is Jeff Howe. However, the phenomenon of the national funding, of course, much older. For instance, the construction of the Statue of Liberty in New York, for which funds were collected by the people. Currently, the national project is financed with the use of the Internet. Author of the project in need of funding, can post information about the project on a special website and request sponsorship of the audience. Firstly, author selects the best crowdfunding platform for project requirements and sign in. then he or she creates and draws up the project. The project that is created must correspond to one of the categories available for selection (music, film, publishing, etc.). If you create brand new product, it is necessary to submit the draft-working prototype or sample product. A full list of design rules for a project can be viewed directly on the site of crowdfunding platform. While calculating the cost of project it is necessary to take into account the cost of realization the project, reward for your sponsors, moreover commission of payment systems and taxes. The project is considered successfully launched after it gets through moderation on website. |
| Date: | 2021–03 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2103.05973&r=all |
| By: | M Niaz Asadullah; Nudrat Faria Shreya; Zaki Wahhaj |
| Abstract: | Although microfinance started as a movement to improve women's economic well-being through increased female entrepreneurship in particular, its impact on women's attitudes toward and participation in the labour market is not fully understood. We fill this gap by combining data on branch locations of the major microfinance institutions in Bangladesh with household survey data and implement a spatial regression discontinuity design. |
| Keywords: | Microfinance, female entrepreneurship, Wellbeing, Gender norms, Regression discontinuity, Bangladesh |
| Date: | 2021 |
| URL: | http://d.repec.org/n?u=RePEc:unu:wpaper:wp-2021-30&r=all |