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Job Creation by the Self-employed: The Roles of Entrepreneurial and Financial Capital

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  • Andrew Henley

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Abstract

The paper reports micro-econometric evidence on the factors that influence the ability of the small businesses to create employment. It uses data on self-employment from a British panel survey. In particular it investigates the contributions of financial and entrepreneurial capital to job creation. Housing wealth appears to be significantly associated with small business job creation. It appears to act as an important source of financial collateral. The parental background of the small business owner is also significantly associated with job creation. Successful entrepreneurs are more likely to have had self-employed parents, and in particular parents who employed others. Educational attainment, in particular at degree level, is also important. The preferred model incorporates individual random effects and the significance of these suggests the importance of unobserved latent entrepreneurial ability. Copyright Springer 2005

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File URL: http://hdl.handle.net/10.1007/s11187-004-6480-1
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Bibliographic Info

Article provided by Springer in its journal Small Business Economics.

Volume (Year): 25 (2005)
Issue (Month): 2 (09)
Pages: 175-196

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Handle: RePEc:kap:sbusec:v:25:y:2005:i:2:p:175-196

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Web page: http://www.springerlink.com/link.asp?id=100338

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References

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  1. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June.
  2. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1994. "Entrepreneurial Decisions and Liquidity Constraints," NBER Working Papers 4526, National Bureau of Economic Research, Inc.
  3. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2000. " When Less Is More: Distinguishing between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-87, December.
  4. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-26, November.
  5. Taylor, Mark P., 1994. "Earnings, independence or unemployment: why become self -employed?," ISER Working Paper Series 26, Institute for Social and Economic Research.
  6. Rees, Hedley & Shah, Anup, 1986. "An Empirical Analysis of Self-employment in the U.K," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 1(1), pages 95-108, January.
  7. Cowling, Marc & Mitchell, Peter, 1997. "The Evolution of U.K. Self-Employment: A Study of Government Policy and the Role of the Macroeconomy," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(4), pages 427-42, September.
  8. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
  9. Cressy, Robert, 1996. "Are Business Startups Debt-Rationed?," Economic Journal, Royal Economic Society, vol. 106(438), pages 1253-70, September.
  10. Taylor, Mark P, 1999. "Self-Employment and Windfall Gains in Britain: Evidence From Panel Data," CEPR Discussion Papers 2084, C.E.P.R. Discussion Papers.
  11. Andrew E. Burke & Felix R. FitzRoy & Michael A. Nolan, 2000. "Self-Employment Wealth and Job Creation: The Roles of Gender, Non-Pecuniary Motivation and Entrepreneurial Ability," CRIEFF Discussion Papers 0006, Centre for Research into Industry, Enterprise, Finance and the Firm.
  12. Black, Jane & de Meza, David & Jeffreys, David, 1996. "House Price, the Supply of Collateral and the Enterprise Economy," Economic Journal, Royal Economic Society, vol. 106(434), pages 60-75, January.
  13. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
  14. Andrew Henley, 2004. "Self-Employment Status: The Role of State Dependence and Initial Circumstances," Small Business Economics, Springer, vol. 22(1), pages 67-82, 02.
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Citations

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Cited by:
  1. 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).
  2. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
  3. Scott L. Newbert & Michael D. Stouder, 2011. "Justice in entrepreneurial organizations," International Journal of Social Economics, Emerald Group Publishing, vol. 38(5), pages 453-465, April.
  4. Eichhorst, Werner & Kahanec, Martin & Kendzia, Michael J. & Wehner, Caroline & al., et, 2013. "Report No. 54: Social Protection Rights of Economically Dependent Self-employed Workers," IZA Research Reports 54, Institute for the Study of Labor (IZA).
  5. Giuliano Guerra & Roberto Patuelli, 2012. "The Role of Job Satisfaction in Transitions into Self-Employment," Working Paper Series 63_12, The Rimini Centre for Economic Analysis, revised Jul 2013.
  6. Darja Reuschke, 2011. "Self-Employment and Geographical Mobility in Germany," SOEPpapers on Multidisciplinary Panel Data Research 417, DIW Berlin, The German Socio-Economic Panel (SOEP).
  7. Backman, Mikaela & Karlsson, Charlie, 2013. "Exploration of Wisdom Ages: Firm survival," Working Paper Series in Economics and Institutions of Innovation 339, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  8. Simoes, Nadia & Moreira, Sandrina B. & Crespo, Nuno, 2013. "Individual Determinants of Self-Employment Entry – What Do We Really Know?," MPRA Paper 48403, University Library of Munich, Germany.
  9. Millán, Ana & Millán, José María & Román, Concepción & van Stel, André, 2013. "How does employment protection legislation influence hiring and firing decisions by the smallest firms?," Economics Letters, Elsevier, vol. 121(3), pages 444-448.
  10. José María Millán & Emilio Congregado & Concepción Román, 2010. "Determinants of Self-Employment Dynamics and their Implications on Entrepreneurial Policy Effectiveness," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 72, pages 45-76.
  11. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Small Business Lending: Evidence from Canada," MPRA Paper 50813, University Library of Munich, Germany.
  12. Morgan, Horatio M., 2013. "Credit Unions, Consolidation and Business Formation: Evidence from Canadian provinces," MPRA Paper 52327, University Library of Munich, Germany.

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