Housing wealth, liquidity constraints and self-employment
AbstractThis paper investigates the existence of liquidity constraints facing entrepreneurs in the United Kingdom. Using a household-level panel data set, entry to self-employment 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.
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Bibliographic InfoArticle provided by Elsevier in its journal Labour Economics.
Volume (Year): 16 (2009)
Issue (Month): 1 (January)
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Web page: http://www.elsevier.com/locate/labeco
Self-employment Liquidity Windfalls;
Other versions of this item:
- Richard Disney & John Gathergood, . "Housing Wealth, Liquidity Constraints and Self-Employment," Discussion Papers 08/03, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
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