Does Career Risk Deter Potential Entrepreneurs?

Joshua Gottlieb, Richard R. Townsend and Ting Xu

No 22446, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Do potential entrepreneurs remain in wage employment because of concerns that they will face worse job opportunities should their entrepreneurial ventures fail? Using a Canadian reform that extended job-protected leave to one year for women giving birth after a cutoff date, we study whether the option to return to a previous job increases entrepreneurship. A regression discontinuity design reveals that longer job-protected leave increases entrepreneurship by 1.9 percentage points. These entrepreneurs start incorporated businesses that hire employees—in industries where experimentation before entry has low costs and high benefits.

JEL-codes: H50 J13 J16 J65 J88 L26 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-dem, nep-ent, nep-ino, nep-lab and nep-sbm
Note: CF LS PE PR
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Citations: View citations in EconPapers (13)

Published as Joshua D Gottlieb & Richard R Townsend & Ting Xu & Francesca Cornelli, 2022. "Does Career Risk Deter Potential Entrepreneurs?," The Review of Financial Studies, vol 35(9), pages 3973-4015.

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