Entrepreneurship, Windfall Gains and Financial Constraints: Evidence from Germany
AbstractWe investigate the link between the propensity to become an entrepreneur and exogenous release from nancial constraints in Germany. This is de ned in terms of the movement from employment to self employment on receipt of a nancial windfall. A theoretical framework developing Evans and Jovanovic (1989) is set up and tested with panel data from German households. The results show that nancial constraints do exist given that individuals are more likely to start a personal business after receiving a windfall gain. The value of windfall gains has a signi cant but non linear e ect on the decision to become self employed. The data reveal that di erences in ability and income a ect the change in employment status. We also report that there is no evidence that becoming self employed involves the anticipation of windfall gains.
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Bibliographic InfoPaper provided by Jönköping International Business School in its series JIBS Working Papers with number 2010-3.
Length: 24 pages
Date of creation: 17 Nov 2010
Date of revision:
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Postal: Jönköping International Business School, P.O. Box 1026, SE-551 11 Jönköping, Sweden
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Entrepreneurship; windfall gains; nancial constraints;
Other versions of this item:
- Schäfer, Dorothea & Talavera, Oleksandr & Weir, Charlie, 2011. "Entrepreneurship, windfall gains and financial constraints: Evidence from Germany," Economic Modelling, Elsevier, vol. 28(5), pages 2174-2180, September.
- Dorothea Schaefer & Oleksandr Talavera & Charlie Weir, 2010. "Entrepreneurship, Windfall Gains and Financial Constraints: Evidence from Germany," University of East Anglia Applied and Financial Economics Working Paper Series 009, School of Economics, University of East Anglia, Norwich, UK..
- G20 - Financial Economics - - Financial Institutions and Services - - - General
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
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