An Estimated Model of Entrepreneurial Choice under Liquidity Constraints

Evans, David S.; Jovanovic, Boyan

doi:10.1086/261629

Cited by 2,552 publications

(1,899 citation statements)

References 17 publications

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“…Finally, due to informational asymmetries that are particularly severe for new start-ups, financing and capital constraints have been identified as a major issue for potential entrepreneurs. Evans and Jovanovic (1989) show that, due to capital constraints, there is a positive relationship between the probability of becoming self-employed and the assets of the entrepreneur. Similarly, Evans and Leighton (1989) show that the exploitation of entrepreneurial opportunities is more common when people have greater financial capital.…”

Section: Control Variables: Characteristics Of Entrepreneurs and Econmentioning

confidence: 99%

Institutions, Finance and the Level of Development: the Impact on Entrepreneurship in Transition

Aidis

Estrin

Mickiewicz

2010

REI

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Abstract:We investigate the impact of institutions on entrepreneurial entry, based on a large cross-country sample, combining working age population data generated by the GEM project with macro level indicators. Our four key findings indicate that: (a) institutional obstacles to entrepreneurship have different impact in rich countries compared to poor countries; (b) institutional obstacles have a stronger impact on 'opportunity entrepreneurship' than on 'necessity entrepreneurship'; (c) two institutional indicators -property right protection and access to finance -appear to have a dominant impact on entrepreneurship; (d) institutions have a long term impact. More than ten years after the Soviet system imploded in Central and Eastern Europe, these countries still experience significantly lower levels of entrepreneurship than economies coming from different legal traditions.JEL classification: L26, P14, P51, P37

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Section: Control Variables: Characteristics Of Entrepreneurs and Econmentioning

confidence: 99%

Institutions, Finance and the Level of Development: the Impact on Entrepreneurship in Transition

Aidis

Estrin

Mickiewicz

2010

REI

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“…Moreover, this concentration of wealth is not simply due to the higher incomes earned by entrepreneurs, since they also have a higher wealth-to-income ratio than workers. This finding suggests that not only are the higher asset holdings of entrepreneurs a consequence of the selection of entrepreneurs among richer families due to the presence of borrowing constraints (as in Evans & Jovanovic (1989)), but it can also be interpreted as evidence of their higher saving rates.…”

Section: Introductionmentioning

confidence: 95%

Entrepreneurship, Saving, and Social Mobility

Quadrini¹

2000

Review of Economic Dynamics

531

377

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This paper examines entrepreneurship in order to analyze, first, the degree to which the opportunity to start or own a business affects the household's saving behavior and the implication of this behavior for the distribution of wealth and, second, the relationship between the extent of entrepreneurship in the economy and socioeconomic mobility, that is, the movement of families across wealth classes over time.First, a number of stylized facts based on data from the Panel Study of Income Dynamics and the Survey of Consumer Finances are outlined. They show relevant differences in asset holdings and wealth mobility between entrepreneurs and workers. Second, a dynamic general equilibrium model with an explicit formalization of the entrepreneurial choice is developed. Through the modeling of the entrepreneurial activities, the model generates a concentration of wealth similar to the one observed in the U. S. economy and it replicates the main patterns of wealth mobility in which entrepreneurs experience higher upward mobility than workers. (JEL E21,D31,J23)

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“…Thus, liquidity access is an important precondition for firm investment and growth (Audretsch & Elston, 2002;Beck, Demirgüç-Kunt, & Maksimovic, 2005;Carpenter & Petersen, 2002;Fagiolo & Luzzi, 2006;Hutchinson & Xavier, 2006;Oliveira & Fortunato, 2006). However, liquidity access has generally been regarded as a common challenge for small and young businesses (Evans & Jovanovic, 1989). In addition, such firms typically experience difficulties raising capital from external sources (Hamilton & Fox, 1998;Stiglitz & Weiss, 1981).…”

Section: Introductionmentioning

confidence: 99%

Assessing Determinants on Job Creation at the Firm Level: Swedish Micro Firm Data

Yazdanfar¹,

Salman²

2012

IJEF

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This study analyses job-creation determinants at the firm level for a panel of Swedish micro firms across four industry sectors, using the GMM (Generalized Method of Moments) system to analyse a database consisting of 12532 Swedish micro firms during 2007. It was found that the firms' size and age, the importance of debt financing and increased availability of liquidity are positively related to job creation as well as industry affiliation. Finally, the results suggest that a resource-based approach is at work in explaining job creation in micro firms. Unlike the majority of previous studies, this study is characterized by being based on a large and cross-sectoral firm-level dataset, testing a number of hypotheses driven from the resource-based approach. The present study contributes to the literature on the determinants of employment at the firm level as it investigates the importance of liquidity and financial leverage to firm labour demand dynamics in Sweden.

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An Estimated Model of Entrepreneurial Choice under Liquidity Constraints

Cited by 2,552 publications

References 17 publications

Institutions, Finance and the Level of Development: the Impact on Entrepreneurship in Transition

Institutions, Finance and the Level of Development: the Impact on Entrepreneurship in Transition

Entrepreneurship, Saving, and Social Mobility

Assessing Determinants on Job Creation at the Firm Level: Swedish Micro Firm Data

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