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on Entrepreneurship |
| By: | Joao Galindo da Fonseca (Université de Montréal); Pierluca Pannella (Sao Paulo School of Economics) |
| Abstract: | We provide evidence that the boom in housing prices occurred in the early 2000 distorted the selection of individuals that opened a business. A simple model of collateral financing predicts an increase in entry into entrepreneurship for house-owners and, particularly, for individuals with lower entrepreneurial ability and higher probability of failure. We support the predictions of the model using panel data at the individual level including restricted access information on the MSA of residence of an individual. We combine this data with geographic information about house prices at the MSA level. We confirm that the increase in house prices had a larger impact on the decision of becoming an entrepreneur for lower ability house-owners. |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2019-03&r=all |
| By: | Kerr, William R.; Robert-Nicoud, Frédéric |
| Abstract: | Tech clusters like Silicon Valley play a central role for modern innovation, business competitiveness, and economic performance. This paper reviews what constitutes a tech cluster, how they function internally, and the degree to which policy makers can purposefully foster them. We describe the growing influence of advanced technologies for businesses outside of traditional tech fields, the strains and backlash that tech clusters are experiencing, and emerging research questions for theory and empirical work. |
| Keywords: | agglomeration; Clusters; entrepreneurship; Innovation; patents |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14143&r=all |
| By: | Burkhard Heer; Mark Trede |
| Abstract: | We present new empirical evidence on the distribution of earnings, income and wealth among entrepreneurs in Germany. We document that both earnings and income are more concentrated among entrepreneurs than among workers and describe a large-scale overlapping-generations model that can replicate these findings. As an application, we compute the equilibrium effects of a reform of the German pay-as-you-go pension system in which entrepreneurs must also contribute and receive a pension. We show that in the presence of mobility between workers and entrepreneurs, the expected lifetime utility of all newborn households unanimously declines due to the general equilibrium effects of lower aggregate savings, and welfare losses amount to approximately 5% of total consumption. In addition, the integration of self-employed workers into the social security system in Germany does not help to improve its fiscal sustainability, and only an increase in the retirement age to 70 years will help to finance pensions at the present level beyond the year 2050. |
| Keywords: | entrepreneurship, aging, income distribution, overlapping generations, social security, fiscal sustainability |
| JEL: | H55 D31 D91 J11 L26 C68 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8439&r=all |
| By: | Joao Galindo da Fonseca (Université de Montréal); Charles Berubé (Innovation, Science and Economic Development Canada) |
| Abstract: | We develop a model of endogenous entrepreneurship and marriage. Spouses influence entrepreneurship via three channels: they reduce benefits by working less the more profitable the business is, they reduce costs by working more in case of business failure, and children, associated with a spouse, increase the cost of failure. We use administrative matched owner-employer-employee spouse data to estimate the specifications derived from our model. The model is informative on the sources of endogeneity and the IV strategy. We show that higher marriage rates induce less entry but larger firms on average. Through the lens of our model, marriage increases firm productivity. |
| Keywords: | Labor markets, Family economics, Macroeconomics, Firm dynamics |
| JEL: | E24 E23 J12 J60 |
| Date: | 2020–04 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2020-03&r=all |
| By: | Hanna Adam |
| Abstract: | This working paper analyses the socioeconomic effects of education in two different political systems by investigating whether individuals educated in a collectivist education system are less likely to become entrepreneurs than individuals educated in an individualist system. It exploits the separation of Vietnam into a communist northern and a capitalist southern part between 1954 and 1975 to identify education in the respective systems, keeping factors such as national culture or historical background fixed. A Probit regression using survey data on 1,164 individuals suggests that being educated in the North makes it 8.6 percent less likely to become an entrepreneur than being educated in the South. This demonstrates that education in different systems may have an effect on entrepreneurial activity, although challenges such as necessity-driven entrepreneurship remain unresolved. |
| Keywords: | Entrepreneurship, Education, Vietnam, Survey data, Probit regression |
| JEL: | L26 N35 O12 P30 R2 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:tvs:wpaper:wp-020&r=all |
| By: | Joao Galindo da Fonseca (Université de Montréal); Charles Berube (Innovation, Science and Economic Development Canada) |
| Abstract: | Does having a spouse influence an individual’s decision to start a firm and what firms they create? The answer to this question is crucial for our understanding of how recent changes to family composition influence firm creation. We develop a model of endogenous entrepreneurship with spousal labour supply decisions and endogenous marriage. Married individuals have three channels, that go in opposite directions, which influence their choice to start a firm relative to the unmarried. Firstly, spouses work less when the business is more profitable partially offsetting the benefit of higher profits (spousal substitution effect). Secondly, if the business fails, the spouse works more hours (spousal insurance effect). Finally, a married individual shares their income with their spouse which decreases their income as a worker, their cost to entrepreneurship (spousal opportunity cost effect). We proceed to test empirically the relative strength of these channels. The model is informative of the components of the error term and the conditions for validity of our instrumental variable strategy. Using city level variation in the past composition of immigrants we show higher marriage rates are associated to more entry and lower average size of startups. |
| Keywords: | Firm dynamics, Macroeconomics, Labor markets, Family economics |
| JEL: | E24 E23 J63 J64 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2019-05&r=all |
| By: | Joao Galindo da Fonseca (Université de Montréal) |
| Abstract: | Are there differences between firms created by unemployed individuals relative to otherwise identical employed individuals? The answer is crucial for understanding the impact of policies that promote entrepreneurship among the unemployed. I develop an equilibrium model of entrepreneurship. Different outside options imply the unemployed are more likely to start firms, but these are smaller and fail more often. I verify these implications using a new administrative Canadian matched owner-employer-employee dataset. I use firm closures to identify random assignments of individuals to unemployment. I find that subsidies for firms started by the unemployed induce a reallocation of resources to low-productivity firms. The mechanism is further tested empirically by verifying that wage workers are more responsive to wages than the unemployed in their decision to start a firm. |
| Keywords: | Firm dynamics, Unemployment, Macroeconomics, Labor markets |
| JEL: | E24 E23 J63 J64 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2019-04&r=all |
| By: | Joao Galindo da Fonseca (Université de Montréal); Iain Snoddy (Vancouver School of Economics, University of British Columbia) |
| Abstract: | The literature on search frictions has often adopted the assumption of free entry. In this paper we forgo of this restriction by proposing a more realistic framework in which individuals are constantly making the decision whether or not to open a firm. Namely, firms are created through endogenous choices and business-owners and workers are drawn from the same pool. We show that in this framework, the Nash bargaining parameter is crucial for internal dynamics. In particular, workers and business owners share the same outside-options. As a result, the wage is no longer unambiguously positively related to the value of unemployment. The constrained efficient solution to this model takes the same form as the standard search model implying the same form for the Hosios condition. However, at this efficient solution changes in the rate of unemployment are either exacerbated or muted conditional on the value of the match elasticity parameter. |
| Keywords: | Search and matching, Entrepreneurship, Outside options, Constrained efficiency |
| JEL: | E24 J63 J64 D61 |
| Date: | 2019–05 |
| URL: | http://d.repec.org/n?u=RePEc:mtl:montde:2019-06&r=all |
| By: | Didier Brandao,Tatiana; Levine,Ross Eric; Llovet Montanes,Ruth; Schmukler,Sergio L. |
| Abstract: | This paper studies whether there is a connection between finance and growth at the firm level. It employs a new dataset of 150,165 equity and bond issuances around the world, matched with income and balance sheet data for 62,653 listed firms in 65 countries over 1990-2016. Three main patterns emerge from the analyses. First, firms that choose to issue in capital markets use the funds raised to grow by enhancing their productive capabilities, increasing their tangible and intangible capital and the number of employees. Growth accelerates as firms raise funds. Second, the faster growth is more pronounced among firms that are more likely to face tighter financing constraints, namely, small, young, and high-R&D firms. Third, capital market issuances are associated with faster growth among firms located in countries with more developed capital markets relative to banks. Capital markets are also comparatively effective at allowing financially constrained firms to raise capital. |
| Keywords: | Financial Sector Policy,Capital Markets and Capital Flows,Capital Flows,Financial Economics,Finance and Development,Mining&Extractive Industry (Non-Energy) |
| Date: | 2020–07–27 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:9337&r=all |
| By: | Hvide, Hans K; Meling, Tom |
| Abstract: | Recent work shows that firms born in cohorts with weak job creation are persistently smaller, even when the aggregate economy recovers. As both demand-side and supply-side factors vary with the business cycle, it is challenging to establish what drives these patterns from aggregate data. We use comprehensive procurement auctions and register data from Norway to study the effect of cross-sectional variation in transient demand shocks on long-run outcomes for startups. Auction winners have more than 20% higher sales and employment than runners-up several years after the auction. They are also more profitable. Investment effects, broadly interpreted, appear important to understand the results. |
| Keywords: | entrepreneurship; Investments; Startups |
| JEL: | D21 D24 G39 J23 L11 L25 |
| Date: | 2019–11 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:14131&r=all |
| By: | Fazekas, Andreas; Kruse, Daniel J.; Herstatt, Cornelius |
| Abstract: | This paper presents a thorough analysis of the research field of Social Innovation (SI). It seeks to contribute to the understanding of how this dynamic research field has developed since the early 2000s by addressing three main topics. First, an analysis of the current intellectual structure of the field derived through a co-citation analysis of 1.184 relevant scientific documents is presented. Second, the role of public institutions for SI is discussed. Third, the theoretically established link between Open Innovation and Social Innovation is examined. The results show that four main cluster exist defining the research field of SI. These clusters are: Social Entrepreneurship, Partnerships and Interaction, Theoretical Foundation and Change and Transition Management. The analysis indicates that a unifying literature body has been established and is commonly accepted in academia. Moreover, the results confirm the strong link to the practice and highlight the relevance of SI for various stakeholder. Based on these results it can be concluded that the research field of SI has developed from being a small and not independent area to a complex, mature, established and independent research field within the last two decades. |
| Keywords: | Social Innovation,Co-Citation Analysis,Intellectual Structure,Social Innovation Definition,Business Innovation,Literature Review,Social Entrepreneurship,Bibliometrics |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:tuhtim:111&r=all |
| By: | Charles Goodhart (London School of Economics); Dimitrios Tsomocos (University of Oxford); Xuan Wang (Vrije Universiteit Amsterdam) |
| Abstract: | A sizeable proportion of enterprises, especially SMEs, in receipt of financial assistance from the government, will fail to repay. In this paper we asked whether, and to what extent, it may be beneficial to apply a screening mechanism to deter those mostly likely to fail to repay from seeking such financial assistance in the first place. The answer largely turns on the relative weights attached for the objectives of stabilisation as compared with allocative efficiency. For this purpose, we develop a two-sector infinite horizon model featuring oligopolistic small businesses and a screening contract in the presence of a pandemic shock with asymmetric information. The adversely affected sector with private information can apply for government loans to reopen businesses once the pandemic has passed. First, we show that a pro-allocation government sets a harsh default sanction to deter entrepreneurs with bad projects from reentering and improves aggregate productivity in the long run, but the economy suffers persistent unemployment in the near term. However, a pro stabilisation government sets a lenient default sanction or provides full guarantees to reach full employment in the short term, but the economy will be shifted to a lower equilibrium in the long run. The optimal default sanction balances the trade-off between allocation and stabilisation. Then, we derive an analytic measure of “Stabilisation Proclivity†and characterise the parameter space and the macro-financial frictions that render the government either more pro-allocation or more pro-stabilisation. Finally, we solve for the optimal default sanction numerically and conducts comparative statics for various policy analyses. |
| Keywords: | COVID-19, Government Guarantees, optimal default sanction, unemployment, productivity, Adverse Selection, private information, screening |
| JEL: | H81 D82 E44 |
| Date: | 2020–07–18 |
| URL: | http://d.repec.org/n?u=RePEc:tin:wpaper:20200044&r=all |
| By: | ANTONESCU, DANIELA (Institutul de Economie Nationala al Academiei Romane) |
| Abstract: | The rapid evolution of the covid-19 pandemic has posed challenges for both the medical system and the economic and social systems of EU Member States and the world. This crisis has affected thousands of lives and continues to put enormous pressure on economic systems. For these reasons, it is necessary to manage economic and social problems as soon as possible and to support / promote solutions to support the sectors affected by the pandemic crisis. In Romania, the crisis began to be felt in March, 2020, the SME sector being one of the most affected sectors. This study analyses the effects of the covid-19 crisis on the SME sector in Romania, trying to bring solutions and proposals for resistance and post-crisis recovery. |
| Keywords: | covid-19, entrepreneurship, resilience |
| JEL: | M10 M12 M2 M21 |
| Date: | 2020–07 |
| URL: | http://d.repec.org/n?u=RePEc:ror:seince:200729&r=all |
| By: | Meyer, Karin |
| Keywords: | Women Entrepreneurship,Entrepreneurship Education,Small and Medium-Sized Companies,Generation Z |
| JEL: | M10 M13 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iubhbm:92020&r=all |