Leraning, life-cycle and entrepreneurial investment
AbstractIn this paper, present a calibrated model of life-cycle occupation and investment decisions where households choose between paid work and entrepreneurship and conditional on the latter how much of their savings to invest in their business. The returns to entrepreneurial activity are modeled through Bayesian learning. The model is able to reproduce the main stylized facts of entry in and exit out of self-employment over the life-cycle. It also suggests a partial explanation of the recent finding of Moskowitz and Vissing-Jørgensen (2002) that entrepreneurs seem not to require a premium for the extra risk of their private equity investment.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2006-29.
Length: 28 pages
Date of creation: Dec 2006
Date of revision:
Publication status: Published by Ivie
Occupational choice; portfolio choice; entrepreneurship; firm dynamics; learning; private equity premium;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-01-23 (All new papers)
- NEP-ENT-2007-01-23 (Entrepreneurship)
- NEP-MAC-2007-01-23 (Macroeconomics)
- NEP-TID-2007-01-23 (Technology & Industrial Dynamics)
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