Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery

Miguel Ferreira, Vicente Bermejo, Daniel Wolfenzon and Rafael Zambrana

No 14638, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: The Spanish Christmas Lottery is the largest lottery worldwide. We exploit local windfall gains arising from lottery prizes to estimate the effect of income on entrepreneurship. We find higher firm creation and greater self-employment in winning provinces. Our estimates imply that 46 firms are created for every €1,000 increase in disposable income per capita. The effect occurs in both non-tradable and tradable industries, and is more pronounced in regions with poorer access to finance. Firms created in winning provinces are larger, create more value-added, and are more likely to survive. These results suggest that local income and financial development are important drivers of entrepreneurship.

Keywords: entrepreneurship; Firm creation; Aggregate income; Local demand; Financial development; Self-employment; Public policy (search for similar items in EconPapers)
JEL-codes: D14 L26 (search for similar items in EconPapers)
Date: 2020-04
New Economics Papers: this item is included in nep-bec, nep-ent, nep-eur, nep-fdg, nep-sbm and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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