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Liquidity Constraints Household Wealth And Entrepreneurship
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Book Synopsis Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited by : Robert W. Fairlie
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.
Book Synopsis Liquidity Constraints, Household Wealth, and Entrepreneurship by : Erik Hurst
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).
Book Synopsis Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited by : Robert W. Fairlie
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:
Book Synopsis Do Liquidity Constraints Matter for New Entrepreneurs? by : Kevin Moore
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.
Book Synopsis Liquidity Constraints, Household Wealth, and Self-Employment by : Julie M. Zissimopoulos
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.
Book Synopsis Do Liquidity Constraints Matter for New Entrepreneurs? by : Kevin B. Moore
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.
Book Synopsis Entrepreneurship, Liquidity Constraints and Start-up Costs by : Raquel Fonseca
Download or read book Entrepreneurship, Liquidity Constraints and Start-up Costs written by Raquel Fonseca and published by . This book was released on 2007 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: In section 4, we set up the model, calibrate it to one particular economy and generate predictions on the effect of liquidity constraints and start-up costs on the relationship between wealth and the fraction of entrepreneurs in an economy. [...] Hence, while entrepreneurial ability is exogenously given, the entrepreneurial rate of return from investing in capital is endogenous and is a function of k the size of the project that the entrepreneur implements. [...] The first term of the right hand side of that equation is the profit that the household keeps for herself and the second term is the amount of payments to the financial intermediary that it saves because of default. [...] In our framework, wealth plays the role of collateral and limits default: the higher is the amount of household wealth invested in the business, the larger is the sum that the bank is able to. [...] However, in order to keep the model tractable, we calibrate the inactivity to similar values for the worker and the entrepreneur, which reduces the number of value functions and state variables in the model.
Book Synopsis Entrepreneurship, Liquidity Constraints and Start-up Costs by : Raquel Fonseca
Download or read book Entrepreneurship, Liquidity Constraints and Start-up Costs written by Raquel Fonseca and published by . This book was released on 2007 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Do Household Savings Encourage Entrepreneurship? Household Wealth, Parental Wealth, and the Transition in and Out of Entrepreneurship by : Erik Hurst
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.
Book Synopsis Measuring Entrepreneurial Businesses by : John Haltiwanger
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.
Book Synopsis Entrepreneurial Decisions and Liquidity Constraints by : Douglas Holtz-Eakin
Download or read book Entrepreneurial Decisions and Liquidity Constraints written by Douglas Holtz-Eakin and published by . This book was released on 1994 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Why are Entrepreneurs Liquidity Constrained? by : Wei-ying Chang
Download or read book Why are Entrepreneurs Liquidity Constrained? written by Wei-ying Chang and published by . This book was released on 1997 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Entrepreneurship and Liquidity Constraints by : Jenny Nykvist
Download or read book Entrepreneurship and Liquidity Constraints written by Jenny Nykvist and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Hurst and Lusardi (2004) use a specification with higher-order polynomials to estimate the relationship between wealth and entrepreneurship. They find evidence against the existence of extensive liquidity constraints in the United States. In this paper, their approach is replicated on Swedish data. A positive relationship between wealth and entrepreneurship is found, which supports the liquidity constraints hypothesis. Alternative methods for handling the endogeneity problem and distinguishing between absolute decreasing risk aversion and liquidity constraints lend further support to the hypothesis. The analysis suggests that there exist liquidity constraints in Sweden, which are possibly more extensive than in the United States.
Book Synopsis Liquidity Constraints, Spillovers, and Entrepreneurship by : Rafael P. Ribas
Download or read book Liquidity Constraints, Spillovers, and Entrepreneurship written by Rafael P. Ribas and published by . This book was released on 2019 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper exploits a welfare programme in Brazil to investigate the role of financial constraints, in opposition to general equilibrium mechanisms, in explaining entrepreneurship. A method for decomposing its impact into direct and indirect effects is presented. Instead of requiring two-level randomization, this method only assumes cluster-level independence of treatment. Results indicate that the number of formal entrepreneurs increased, but only due to the indirect component. Further tests suggest that the indirect effect is associated with an increase in private transfers between households. Thus entrepreneurship tends to respond more to the interaction between households than to financial constraints.
Book Synopsis Liquidity Constraints and Entrepreneurial Performance by : Hans K. Hvide
Download or read book Liquidity Constraints and Entrepreneurial Performance written by Hans K. Hvide and published by . This book was released on 2007 with total page 30 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Household Leverage and the Recession by : Callum Jones
Download or read book Household Leverage and the Recession written by Callum Jones and published by International Monetary Fund. This book was released on 2018-08-30 with total page 51 pages. Available in PDF, EPUB and Kindle. Book excerpt: We evaluate and partially challenge the ‘household leverage’ view of the Great Recession. In the data, employment and consumption declined more in states where household debt declined more. We study a model where liquidity constraints amplify the response of consumption and employment to changes in debt. We estimate the model with Bayesian methods combining state and aggregate data. Changes in household credit limits explain 40 percent of the differential rise and fall of employment across states, but a small fraction of the aggregate employment decline in 2008-2010. Nevertheless, since household deleveraging was gradual, credit shocks greatly slowed the recovery.
Book Synopsis Precautionary Savings and the Importance of Business Owners by : Erik Hurst
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.
