Housing Wealth, Liquidity Constraints and Self-Employment

Richard Disney and John Gathergood

Discussion Papers from University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM)

Abstract: This paper investigates the existence of liquidity constraints facing entrepreneurs in the United Kingdom. Using a household-level panel data set, entry to selfemployment is shown to be a function of household net worth. We use inheritances and unanticipated movements in house prices as instruments for shocks to liquidity. Results indicate that inheritances are a poor instrument for liquidity constraints because both past and future inheritances predict entry to self-employment. House prices shocks are a more plausible instrument because self-employed households disproportionately re-mortgage, but our results again indicate little evidence of house price shocks unbinding liquidity constraints facing the would-be self-employed.

Keywords: Self-employment; liquidity; windfalls. (search for similar items in EconPapers)
Date: 2008-03
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Citations: View citations in EconPapers (8)

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Related works:
Journal Article: Housing wealth, liquidity constraints and self-employment (2009)
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Persistent link: https://EconPapers.repec.org/RePEc:not:notcfc:08/03

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