Effects of wealth inequality on entrepreneurship

Frid, Casey J.; Wyman, David; Coffey, Bentley

doi:10.1007/s11187-016-9742-9

Cited by 35 publications

(44 citation statements)

References 50 publications

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“…As Swedish wealth taxation was abolished in 2005, our microdata do not include measures of wealth. Since prior studies have suggested that entrepreneurship is a key element in understanding wealth concentration (Buera, 2009;Frid et al, 2016;Quadrini, 1999), future research could, for example, expand on our model by examining wealth inequality instead of income inequality. Future studies would also benefit from cross-country comparisons using microdata on income and occupations.…”

Section: Discussionmentioning

confidence: 99%

Entrepreneurship and income inequality

Halvarsson

Korpi

Wennberg

2018

Journal of Economic Behavior & Organization

102

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Section: Discussionmentioning

confidence: 99%

Entrepreneurship and income inequality

Halvarsson

Korpi

Wennberg

2018

Journal of Economic Behavior & Organization

102

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“…Similarly, Frid, Wyman, and Coffey (2016) show that according to the liquidity constraints theory, low-wealth and moderately wealthy nascent entrepreneurs face liquidity constraints and are significantly more likely to disengage from the startup process during gestation. However, once the gestation process is over, wealth does not affect the success of a new venture.…”

Section: Theoretical Frameworkmentioning

confidence: 88%

Income inequality and entrepreneurship

Lecuna

2019

Economic Research-Ekonomska Istraživanja

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Many scholars argue that entrepreneurship concentrates wealth not only because rich families choose entrepreneurial occupations more often but also because entrepreneurs tend to earn and save more income than workers. However, based on panel data obtained from 54 countries during the period of 2006-2012, this empirical study found that public policies targeting formal and informal entrepreneurs are associated with decreased inequalities in the distribution of income. The data reveal no significant effect of high-aspiration entrepreneurs or newly registered firms on income distribution, suggesting that the informal information captured in the 'total entrepreneurial activity' measurement is a crucial factor explaining the variations observed in income inequality. Because entrepreneurial activity could be particularly successful in decreasing income inequality if targeted at the informal segments of society, the novel findings presented here open a new theoretical perspective that contradicts the commonly used conceptual framework, which tends to associate entrepreneurial activity with higher-income inequality. ARTICLE HISTORY

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“…Although some find that liquidity constraints deter self-employment for poorer households (Gentry and Hubbard, 2004;Zissimopolos et al, 2009), others find no evidence of a necessary binding liquidity constraint (Hurst and Lusardi, 2004). As Frid et al (2016) argue, this mixed evidence might be explained by two factors. First, the empirical literature has typically not considered the initial wealth of the household, prior to becoming an entrepreneur.…”

Section: Does Inequality Deter Entrepreneurial Activity?mentioning

confidence: 99%

Does Inequality Foster or Hinder the Growth of Entrepreneurship in the Long-Run?

Gutiérrez-Romero

Méndez-Errico

2017

SSRN Journal

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This article assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor (GEM) survey across 66 countries over 2005-2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries' degree of financial inclusion, corruption and political stability. We find that although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust to using different measures of inequality across different points in time and regions, even if excluding Latin America the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path.

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Effects of wealth inequality on entrepreneurship

Cited by 35 publications

References 50 publications

Entrepreneurship and income inequality

Entrepreneurship and income inequality

Income inequality and entrepreneurship

Does Inequality Foster or Hinder the Growth of Entrepreneurship in the Long-Run?

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