Does Inequality Foster or Hinder the Growth of Entrepreneurship in the Long Run?

Roxana Gutiérrez-Romero and Luciana Méndez-Errico
Authors registered in the RePEc Author Service: Luciana Méndez Errico

A chapter in Research on Economic Inequality, 2017, vol. 25, pp 299-341 from Emerald Group Publishing Limited

Abstract: This chapter assesses the extent to which historical levels of inequality affect the creation and survival of businesses over time. To this end, we use the Global Entrepreneurship Monitor survey across 66 countries over 2005–2011. We complement this survey with data on income inequality dating back to early 1800s and current institutional environment, such as the number of procedures to start a new business, countries’ degree of financial inclusion, corruption and political stability. We find that, although inequality increases the number of firms created out of need, inequality reduces entrepreneurial activity as in net terms businesses are less likely to be created and survive over time. These findings are robust in using different measures of inequality across different points in time and regions, even if excluding Latin America, the most unequal region in the world. Our evidence then supports theories that argue early conditions, crucially inequality, influence development path.

Keywords: Inequality; entrepreneurship; panel data; instrumental variables; M2; O1; D3; C23 (search for similar items in EconPapers)
Date: 2017
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 ... 9-258520170000025009
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)

Related works:
Working Paper: Does inequality foster or hinder the growth of entrepreneurship in the long-run? (2017)
Working Paper: Does inequality foster or hinder the growth of entrepreneurship in the long-run? (2017)
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:reinzz:s1049-258520170000025009

DOI: 10.1108/S1049-258520170000025009

Access Statistics for this chapter

More chapters in Research on Economic Inequality from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().