House Prices, Household Leverage, and Entrepreneurship

Stefano Corradin
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Stefano Corradin: European Central Bank

No 631, 2013 Meeting Papers from Society for Economic Dynamics

Abstract: This paper estimates the causal effect of changes in home equity and household leverage on entrepreneurship and business ownership. Using a large individual-level survey dataset, we show that higher home equity increases the probability of transition into entrepreneurship, while higher household leverage has a significantly positive effect on business equity ownership. These effects are stronger in "hot" housing markets where agents expect house prices to keep increasing in the future. Our results persist when we use the topological elasticity of housing supply to generate variation in home equity that is orthogonal to entrepreneurial choice.

Date: 2013
New Economics Papers: this item is included in nep-ent and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:red:sed013:631

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