Entrepreneurial Choice and Performance: A Re-Appraisal of Liquidity and Human Capital Constraints

Andrew E Burke, Felix R FitzRoy and Michael A Nolan

CRIEFF Discussion Papers from Centre for Research into Industry, Enterprise, Finance and the Firm

Abstract: A new theory of entrepreneurial effort demonstrates that reducing liquidity constraints may retard the performance of the self-employed. A two dimensional empirical approach then distinguishes the impact of human and financial capital on both the number and performance of the self-employed. This analysis supports the theory - exogenous financial capital (inheritance) increases the number of self-employed but not their income. It also finds an inverse U-shaped relationship between inheritance and numbers hired by the self-employed. Higher levels of education reduce the number of self-employed but enance their performance. The net effect of education on employment creation is positive.

Keywords: Self-employment; entrepreneurship; employment; liquidity constraints (search for similar items in EconPapers)
JEL-codes: J23 M13 (search for similar items in EconPapers)
Date: 1997-10
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Persistent link: https://EconPapers.repec.org/RePEc:san:crieff:9723

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