Liquidity Constraints, Cash Windfalls, and Entrepreneurship: Evidence from Administrative Data on Lottery Winners

Hsuan-Hua Huang, Hsing-Wen Han, Kuang-Ta Lo and Tzu-Ting Yang

Papers from arXiv.org

Abstract: Using administrative data on Taiwanese lottery winners, this paper examines the effects of cash windfalls on entrepreneurship. We compare the start-up decisions of households winning more than 1.5 million NTD (50,000 USD) in the lottery in a particular year with those of households winning less than 15,000 NTD (500 USD). Our results suggest that a substantial windfall increases the likelihood of starting a business by 1.5 percentage points (125% from the baseline mean). Startup wealth elasticity is 0.25 to 0.36. Moreover, households who tend to be liquidity-constrained drive the windfall-induced entrepreneurial response. Finally, we examine how households with a business react to a cash windfall and find that serial entrepreneurs are more likely to start a new business but do not change their decision to continue the current business.

Date: 2023-03
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-fdg and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://arxiv.org/pdf/2303.17029 Latest version (application/pdf)

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:arx:papers:2303.17029

Access Statistics for this paper

More papers in Papers from arXiv.org
Bibliographic data for series maintained by arXiv administrators ().