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Self-Employment Among the Over 50s: The Role of Individual Wealth and Business Start-Up Costs

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  • Raquel Fonseca

    (RAND)

  • Pierre-Carl Michaud

    (RAND)

  • Thepthida Sopraseuth

    (Université dEvry, EPEE, CEPREMAP and PSE)

Abstract

In an economy with liquidity constraints, individuals face greater difficulty starting their business because of a lack of sufficient financing. We study the impact of such constraints, and also the effect of business start-up costs, on the relationship between individual wealth and the proportion of self-employed individuals in the economy. The dynamic model of business start-up choice, developed in this paper, predicts an upward sloping relationship between wealth and the proportion of self-employed workers in the economy. It also predicts that this relationship will weaken when business start-up costs are taken into account. The estimates tend to confirm that liquidity constraints do influence the decision to go self-employed. Our results underline the importance of the combined impact of liquidity restrictions and business start-up costs on the decision to become self-employed. A policy of financial assistance for entrepreneurs would be of little use if business start-up costs remain high.

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Bibliographic Info

Article provided by Institut National de la Statistique et des Etudes Economiques in its journal Economie et Statistique.

Volume (Year): 403-404 (2007)
Issue (Month): (December)
Pages: 63-82

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Handle: RePEc:crs:ecosta:es403-404d

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Related research

Keywords: Entrepreneurship; Wealth; Liquidity Constraints; Start-Up Costs;

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