Personal Wealth and Self-Employment

Aymeric Bellon, J. Anthony Cookson, Erik P. Gilje and Rawley Heimer

No 27452, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We examine how wealth windfalls affect self-employment decisions using data on cash payments from claims on Texas shale drilling to people throughout the United States. Individuals who receive large wealth shocks (greater than $50,000) have 51% higher self-employment rates. The increase in self-employment rates is driven by individuals who lengthen existing self-employment spells, and not by individuals who leave regular employment for self-employment. Moreover, the effect of wealth reverts for individuals whose payments run out. Rather than alleviating a financial constraint, our evidence suggests that unrestricted cash windfalls affect self-employment decisions primarily through self-employment’s non-pecuniary benefits.

JEL-codes: G02 G5 G51 L26 (search for similar items in EconPapers)
Date: 2020-06
New Economics Papers: this item is included in nep-exp
Note: CF
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