Marginal Entrepreneurs

Shai Bernstein, Emanuele Colonnelli, Davide Malacrino and Timothy James McQuade
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Shai Bernstein: Stanford University
Davide Malacrino: IMF
Timothy James McQuade: Stanford University

Research Papers from Stanford University, Graduate School of Business

Abstract: Firm entry plays an important role in the amplification and propagation of aggregate economic shocks. In this paper, we study the characteristics of the actual individuals who drive firm entry response to aggregate shocks, the marginal entrepreneurs. We use employer-employee matched data from Brazil and develop an empirical strategy that links fluctuations in global commodity prices to municipality level agricultural endowments to identify local demand shocks. We find that increases in global commodity prices lead to a significant increase in new firm creation and this effect is almost entirely driven by young individuals. Within the young, we further document that the most responsive individuals are those who are more educated and who work in occupations that require generalist, managerial skills. In contrast, we find no such response among older skilled and educated individuals. Municipalities with better access to finance and higher concentrations of skilled individuals see a stronger entrepreneurial response by the young. These findings shed light on the potential ramifications of aging populations on the entrepreneurial responsiveness of economies to aggregate shocks.

Date: 2018-03
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:stabus:3650

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