Personal Wealth, Self-Employment, and Business Ownership

House prices, collateral, and self-employment

Aymeric Bellon, J Anthony Cookson, Erik P Gilje, Rawley Z Heimer and Stijn Van Nieuwerburgh

The Review of Financial Studies, 2021, vol. 34, issue 8, 3935-3975

Abstract: We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.

JEL-codes: G39 G51 L26 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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