Entrepreneurship, windfall gains and financial constraints: Evidence from Germany

Dorothea Schäfer, Oleksandr Talavera () and Charlie Weir

Economic Modelling, 2011, vol. 28, issue 5, 2174-2180

Abstract: We investigate the link between the propensity to become an entrepreneur and the exogenous release from financial constraints in Germany. This is defined in terms of the movement from employment to self-employment on receipt of a financial windfall. A theoretical framework developing Evans and Jovanovic (1989) is set up and tested with panel data from German households. The results show that financial constraints do exist given that individuals are more likely to start a personal business after receiving a windfall gain. The value of windfall gains has a significant but non linear effect on the decision to become self employed. The data reveal that differences in ability and income affect the change in employment status. We also report that there is no evidence that becoming self-employed involves the anticipation of windfall gains.

Keywords: Entrepreneurship; Windfall; gains; Financial; constraints (search for similar items in EconPapers)
Date: 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (17)

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Related works:
Working Paper: Entrepreneurship, Windfall Gains and Financial Constraints: Evidence from Germany (2010)
Working Paper: Entrepreneurship, Windfall Gains and Financial Constraints: Evidence from Germany (2010)
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