Externalities of home-ownership on entrepreneurship: empirical evidence

Jani-Petri Laamanen

International Journal of Housing Markets and Analysis, 2018, vol. 12, issue 1, 94-109

Abstract: Purpose - This study aims to examine the externalities from regional home-ownership to individual-level entrepreneurship. Design/methodology/approach - The paper links individual-level data from the Finnish Income Distribution Statistics for years 1990-1992 to regional home-ownership proportions. Probit models of entrepreneurship with regional home-ownership and appropriate control variables as regressors are estimated. A rental housing market deregulation experiment which caused exogenous variation in regions’ home-ownership is exploited to identify the causal effects on entrepreneurship. Findings - Results show that higher home-ownership in a region leads to greater entrepreneurship. Further analyses together with the fact that homeownership tends to have detrimental labour market effects suggest that homeownership encourages entrepreneurship by leading to less paid work opportunities. These results are in line with those of earlier literature that self-employment and entrepreneurship, especially during bad economic times, are partly motivated by bad employment opportunities. Originality/value - This study presents novel results on the externalities that home-ownership has on entrepreneurship. These externalities are shown to be important enough that they need to be considered when assessing the economic effects of various policies that affect the prevalence of owner-occupied housing. The instrumental variables’ estimates are the first causal estimates in the literature and the bias resulting from assuming exogeneity is shown to be nonnegligible.

Keywords: Self-employment; Externalities; Entrepreneurship; Home-ownership; Housing system reforms; Instrumental variables estimation; L26; R31; C26 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:ijhmap:ijhma-01-2018-0008

DOI: 10.1108/IJHMA-01-2018-0008

Access Statistics for this article

International Journal of Housing Markets and Analysis is currently edited by Dr Richard Reed

More articles in International Journal of Housing Markets and Analysis from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().