Spouses and Entrepreneurship

Joao Galindo da Fonseca and Charles Berubé
Additional contact information
Charles Berubé: Innovation, Science and Economic Development Canada

No 05-2019, Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ

Abstract: Does having a spouse influence an individual’s decision to start a firm and what firms they create? The answer to this question is crucial for our understanding of how recent changes to family composition influence firm creation. We develop a model of endogenous entrepreneurship with spousal labour supply decisions and endogenous marriage. Married individuals have three channels, that go in opposite directions, which influence their choice to start a firm relative to the unmarried. Firstly, spouses work less when the business is more profitable partially offsetting the benefit of higher profits (spousal substitution effect). Secondly, if the business fails, the spouse works more hours (spousal insurance effect). Finally, a married individual shares their in-come with their spouse which decreases their income as a worker, their cost to entrepreneurship (spousal opportunity cost effect). We proceed to test empirically the relative strength of these channels. The model is informative of the components of the error term and the conditions for validity of our instrumental variable strategy. Using city level variation in the past composition of immigrants we show higher marriage rates are associated to more entry and lower average size of startups.

Keywords: firm dynamics; macroeconomics; labor markets; family economics (search for similar items in EconPapers)
JEL-codes: E23 E24 J63 J64 (search for similar items in EconPapers)
Date: 2019-05
New Economics Papers: this item is included in nep-bec, nep-mac and nep-sbm
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.cireqmontreal.com/wp-content/uploads/cahiers/05-2019-cah.pdf (application/pdf)

Related works:
Working Paper: Spouses and entrepreneurship (2019)
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:mtl:montec:05-2019

Access Statistics for this paper

More papers in Cahiers de recherche from Centre interuniversitaire de recherche en économie quantitative, CIREQ Contact information at EDIRC.
Bibliographic data for series maintained by Sharon BREWER ().