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State Bankruptcy Law and Entrepreneurship : Evidence from a Border Analysis

Author

Listed:
  • Shawn M. Rohlin

    (Kent State University, Department of Economics)

  • Amanda Ross

    (West Virginia University, College of Business and Economics)

Abstract

This paper examines how differences in state bankruptcy laws, specifically the amount of the homestead exemption, affect business location decisions within a few miles of the state boundary. By focusing on these border areas, we are able to more effectively control for unobserved local attributes and isolate the effect of more wealth protection. We find that an increase in the homestead exemption attracts new businesses. We also find that a more generous homestead exemption has a positive impact on existing businesses, suggesting that asset protection through bankruptcy law encourages successful entrepreneurs to incur the risks. Our results indicate that the wealth protection provided by personal bankruptcy law is an important policy tool that state governments can use to attract new, successful businesses owners.

Suggested Citation

  • Shawn M. Rohlin & Amanda Ross, 2014. "State Bankruptcy Law and Entrepreneurship : Evidence from a Border Analysis," Working Papers 14-12, Department of Economics, West Virginia University.
    • Handle: RePEc:wvu:wpaper:14-12
    as

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    File URL: http://be.wvu.edu/phd_economics/pdf/14-12.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    bankruptcy law; entrepreneurship; border methodology;
    All these keywords.

    JEL classification:

    • K30 - Law and Economics - - Other Substantive Areas of Law - - - General
    • K36 - Law and Economics - - Other Substantive Areas of Law - - - Family and Personal Law
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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