Self-employment and Liquidity Constraints: Evidence from Finland

Using a large Finnish micro data set, I study how wealth influences the decision to become self-employed. The main result is that personal wealth increases the probability of a person becoming self-employed. This suggests the presence of liquidity constraints.
JEL classification: J 23; M 13     

女企业家创业意向缓冲因素研究

女企业家在知识经济时代,由于不再如在传统工业经济和农业经济时代靠体力决定经济地位,而是和男性第一次站在平等的起跑线上开始她们的创业,使得她们的地位越来越重要。但一个不容忽视的现实是拥有同样自身条件的男性和女性,在同样面临创业机会时,女性真正投入创业的比例远远低于男性,本研究用实证的方式,采用相关分析、方差分析、探索性因素分析、缓冲作用检验等统计方法,对351位女性创业者进行问卷调查的基础上提出了家庭承诺和性别认同是影响女性创业意向的缓冲因素,本研究为如何激发女性创业提供了实证基础。     

个人禀赋、制度环境与创业决策:一个实证研究

本文研究发现,返乡者的企业家人力资本、可支配财富、教育程度等个人禀赋因素对创业决策有着重大影响;同时,政府的质量对返乡者的创业倾向也有相当大的影响。虽然上述因素的变化可在边际上大幅度影响返乡者选择自雇型创业的倾向,但对于其规模型创业倾向的影响要弱得多。上述实证结果表明,为了激励创业活动,政府应首先减少腐败和提高办事效率,并充分认识到,自雇型创业而非规模型创业才是最有效的帮助对象。     

LIQUIDITY CONSTRAINTS,HOUSEHOLD WEALTH,AND ENTREPRENEURSHIP REVISITED

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.     

Does labor diversity promote entrepreneurship?

We find evidence that workforce educational diversity promotes entrepreneurial behavior of employees as well as the formation of new firms, whereas diversity in demographics hinders transitions to self-employment. Ethnic diversity favors entrepreneurship in financial and business services.     

Entrepreneurship and Liquidity Constraints: Evidence from Sweden

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.     

Wealth, Enterprise and Credit Policy

Empirical evidence suggests that capital-market constraints prevent low-wealth individuals from setting up in business. This paper shows this finding to be consistent with socially excessive lending and an interest-rate tax being welfare-improving. One feature of the model, banks' inability to identify entrepreneurial quality, leads to excessive bank lending and investment in low-return projects. The reduction in the probability of bankruptcy lowers the cost of borrowing and eliminates deadweight costs and hence promotes entry. If the incentive effects are sufficiently large, wealth and the volume of entrepreneurial activity move together. A key result of the paper is to show that a market equilibrium in which there is a positive relationship between entry and the level of wealth is consistent with either subsidies to inactivity or taxes on interest raising welfare.     

创业政策对大学生创业动力的影响实证研究

我国中央及各地方政府出台了一系列政策以激励大学生创业,但大学毕业生的自主创业比例及成功率均很低.本文从创业政策角度实证探讨了其对大学生创业动力的影响,对完善大学生创业政策具有一定的参考意义.以大学生为研究对象,在564份有效问卷的基础上,通过因子分析提取商务支持、金融支持、创业教育、配套措施、创业文化五个创业政策因子,以及内在、外在创业动力两个创业动力因子.实证结果表明,五个创业政策因子均与大学生内在、外在创业动力有显著正相关性,其中金融支持和配套措施对外在创业动力的影响最为显著,配套措施对内在创业动力的影响最为显著.     

Occupational choice and liquidity constraints

Using U.S. data, Evans and Jovanovic find a strong effect of the level of assets on the probability of being self-employed. They interpret this result as evidence of liquidity constraints. In this paper, we follow up this line of research: first, by replicating Evans and Jovanovic's methodology on French data to show that the empirical evidence is similar. Second, we embed their static model into a dynamic framework with uncertainty. The main theoretical prediction that can be drawn is that if the liquidity constraint is strong enough a future increase in the “entrepreneurial ability” of an agent, although raising expected future incomes, may induce her to lower her current consumption and raise her savings.     

Why do some firms contract out production? Evidence from firm-level panel data

This paper examines the determinants of self-employment and transitions from salaried employment to self-employment using two sets of Finnish data from the 1990s. The results show that capital constraints have only a minor effect on new business starts. Human capital, in the form of intergenerational links in self-employment and psychological factors play a much larger role. The paper also provides empirical evidence that less risk-averse workers are more likely to become entrepreneurs.     

Can entrepreneurship bring happiness? Evidence from China

This paper investigates the relationship between entrepreneurial activities and the happiness of entrepreneurs. We estimate the effects of entrepreneurial decision-making, business experience and other factors on happiness by using China Household Finance Survey data. Our results derived from maximum likelihood estimation methods indicate that entrepreneurial decision-making and entrepreneurial experience affect household happiness significantly. The family well-being is significantly increased if the family is entrepreneurial, and it will be higher if actively entrepreneurial. Both entrepreneurial experience and entrepreneurial investment of time have significantly positive effect on the probability of family well-being. In addition, we find that the mechanism by which entrepreneurship brings happiness to households is through raising household income and wealth, that is, income effects and wealth effects.     

Entrepreneurship, windfall gains and financial constraints: Evidence from Germany

We investigate the link between the propensity to become an entrepreneur and the exogenous release from financial constraints in Germany. This is defined in terms of the movement from employment to self-employment on receipt of a financial windfall. A theoretical framework developing Evans and Jovanovic (1989) is set up and tested with panel data from German households. The results show that financial constraints do exist given that individuals are more likely to start a personal business after receiving a windfall gain. The value of windfall gains has a significant but non linear effect on the decision to become self employed. The data reveal that differences in ability and income affect the change in employment status. We also report that there is no evidence that becoming self-employed involves the anticipation of windfall gains.     

Informal self-employment and macroeconomic fluctuations

Informal self-employment is a major source of employment in developing countries. Its cyclical behavior is important to our understanding of the functioning of LDC labor markets, but turns out to be surprisingly complex. We develop a flexible model with two sectors: a formal salaried (tradable) sector that may be affected by wage rigidities, and an informal (non tradable) self-employment sector faced with liquidity constraints to entry. This labor market is then embedded in a standard small economy macro model. We show that different types of shocks interact with different institutional contexts to produce distinct patterns of comovement between key variables of the model: relative salaried/self-employed incomes, relative salaried/self-employed sector sizes and the real exchange rate. Model predictions are then tested empirically for Argentina, Brazil, Colombia and Mexico. We confirm episodes where the expansion of informal self-employment is consistent with the traditional segmentation views of informality. However, we also identify episodes where informal self-employment behaves “pro-cyclically”; here, informality is driven by relative demand or productivity shocks to the non tradable sector.     

THE LIQUIDITY TRAP AND PERSISTENT UNEMPLOYMENT WITH DYNAMIC OPTIMIZING AGENTS: EMPIRICAL EVIDENCE

Standard money-in-utility dynamic models assume satiable liquidity preference, and thereby prove the existence of a full-employment steady state. In the same framework, it is known that under insatiable liquidity or wealth preference there is a case where a full-employment steady state does not exist. A liquidity trap then arises and unemployment persists in the steady state. Using both parametric and non-parametric methods, this paper empirically finds that insatiable liquidity/wealth preference is better supported. Thus, without assuming any permanent distortion, we can analyse an effective demand shortage in a dynamic optimization framework.     

When expectations become aspirations: reference-dependent preferences and liquidity constraints

A large body of literature suggests that consumers derive utility from gains and losses relative to a reference point. This paper shows that such reference dependence can affect savings in opposite directions depending on whether people face liquidity constraints. Existing models for wealth and intertemporal choice predict that reference dependence reduces savings, but these models abstract from liquidity constraints. Introducing a liquidity constraint, I find that reference dependence can increase optimal savings for people without access to credit. Ex post, after reference points have been formed, liquidity constraints force consumers to take part of an income loss in early periods, inducing those who are reference dependent to concentrate the full loss in early periods and save in order to eliminate future losses. Further, anticipating a liquidity constraint raises the expected level of future consumption and thus the expectations-based reference point for future periods, creating an ex-ante savings motive. These findings underscore that it is important to account for financial market imperfections when applying or testing reference-dependent models in low-income settings, and potentially explain heterogeneity in how much the poor save when facing binding liquidity constraints.     

流动性约束与货币政策的资产价格效应

本文在新凯恩斯主义分析框架下,基于一个动态随机模型探讨了代理人消费流动性约束下的货币政策的资产价格效应,得到下列结论：资产价格波动通过财富效应影响代理人的消费。以利率为操作目标的最优货币政策应对股价、房价等资产价格波动做出反应,而其反应强度依赖于受流动性约束的代理人所占的比重。由于资产价格波动导致了流动性约束的时变性,最优利率规则对股价、房价等资产价格波动的最优权重也具有时变性。本文的实证分析表明,我国央行对房价和股价波动的利率调整具有时变性,以及此次金融危机爆发期间显现的这种时变性特征,与本文理论分析结果相吻合。     

Taxation and the quality of entrepreneurship

We study the effect of taxation on entrepreneurship, investigating how taxes affect both the number of start-ups and their average quality. We show theoretically that even with risk neutral agents and no tax evasion progressive taxes can increase entrepreneurial entry, while reducing average firm quality. So called “success taxes” encourage start-ups with lower value business ideas by reducing the option value of pursuing better projects. This suggests that the most common measure used in the literature, the likelihood of entry into self-employment, may underestimate the adverse effect of taxation.     

CYCLICAL FLUCTUATIONS IN FACTOR SHARES AND THE SIZE DISTRIBUTION OF INCOME

The way in which cyclical fluctuations in activity in the U.K. economy affect factor income shares and the channels through which these effects work through to the size distribution of income are traced. Using National Accounts data, the impact of an upturn in activity in increasing the shares of profits and self-employment income in factor incomes, and of self-employment and rent, interest and dividends in personal incomes, is quantified. Using Family Expenditure Survey micro-data, the resulting shift in decile shares in personal income, which is towards the top of the size distribution, is estimated.     

Enterprise, Inequality and Economic Development

We characterize an equilibrium development process driven by the interactionof the distribution of wealth with credit constraints and the distributionof entrepreneurial skills. When efficient entrepreneurs are relativelyabundant, a "traditional" development process emerges in whichthe evolution of macroeconomic variables accord with empirical regularitiesand income inequality traces out a Kuznets curve. If, instead, efficiententrepreneurs are relatively scarce, the model generates long-run"distributional cycles" driven by the endogenous interactionbetween credit constraints, entrepreneurial efficiency and equilibriumwages.