Selection into entrepreneurship and self-employment

Ross Levine () and Yona Rubinstein

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We study the effects of ability and liquidity constraints on entrepreneurship. We develop a three sector Roy model that differentiates between entrepreneurs and other self-employed to address puzzling gaps that have emerged between theory and evidence on entry into entrepreneurship. The model predicts—and the data confirm—that entrepreneurs are positively selected on highly-remunerated cognitive and non-cognitive human capital skills, but other self-employed are negatively selected on those same abilities; entrepreneurs are positively selected on collateral, but other self-employed are not; and entrepreneurship is procyclical, but self-employment is countercyclical.

Keywords: entrepreneurship; human capital; occupational choice; corporate finance; business cycles (search for similar items in EconPapers)
JEL-codes: E32 G32 J24 L26 (search for similar items in EconPapers)
Date: 2020-10-01
New Economics Papers: this item is included in nep-ent, nep-mac, nep-neu and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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https://cep.lse.ac.uk/pubs/download/dp1722.pdf (application/pdf)

Related works:
Working Paper: SELECTION INTO ENTREPRENEURSHIP AND SELF-EMPLOYMENT (2020)
Working Paper: Selection into entrepreneurship and self-employment (2020)
Working Paper: Selection into Entrepreneurship and Self-Employment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1722

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