Personal Wealth and Self-Employment

Bellon, Aymeric; Cookson, J. Anthony; Gilje, Erik; Heimer, Rawley Z.

doi:10.2139/ssrn.3551576

Cited by 1 publication

(1 citation statement)

References 70 publications

(62 reference statements)

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“…Haltiwanger et al, 2013). Our findings are consistent with those found in other contexts and countries when liquidity or credit constraints are relaxed or income fallbacks are provided: for example, Jensen et al (2014) show that a Danish mortgage reform that increases credit by $30K leads to an increase in entry, while Gottlieb et al (2018) show that extended jobprotected maternity leave in Canada increases the likelihood of entry, Bellon et al (2019) show that personal wealth windfalls from fracking increase entry into self-employment, and Hombert et al (2020) show that provision of unemployment insurance to those entering into entrepreneurship increases new business formation. More broadly, our paper relates to a growing literature on entrepreneurial entry barriers, including personal wealth, government regulation, tax policy, and banking systems (see e.g.…”

Section: Introductionsupporting

confidence: 88%

Launching with a Parachute: The Gig Economy and Entrepreneurial Entry

Barrios

Hochberg

2020

SSRN Journal

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The introduction of the gig economy creates opportunities for would-be entrepreneurs to supplement their income in downside states of the world, and provides insurance in the form of an income fallback in the event of failure. We present a conceptual framework supporting the notion that the gig economy may serve as an income supplement and as insurance against entrepreneurial-related income volatility, and utilize the arrival of the on-demand, platform-enabled gig economy in the form of the staggered rollout of ridehailing in U.S. cities to examine the effect of the arrival of the gig economy on entrepreneurial entry. The introduction of gig opportunities is associated with an increase of ~5% in the number of new business registrations in the local area, and a correspondingly-sized increase in small business lending to newly registered businesses. Internet searches for entrepreneurship-related keywords increase ~7%, lending further credence to the predictions of our conceptual framework. Both the income supplement and insurance channels are empirically supported: the increase in entry is larger in regions with lower average income and higher credit constraints, as well as in locations with higher ex ante economic uncertainty regarding future wage levels and wage growth.

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