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The housing boom and selection into entrepreneurship

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  • da Fonseca, João Galindo
  • Pannella, Pierluca

Abstract

Existing evidence shows that increases in property prices produce immediate positive effects on economic activity and, particularly, on business creation. In this paper, we ask the following question: how does a housing boom alter the selection of individuals that open a firm? The answer to this question is important to understand how robust and long-lasting is the positive effect of a housing shock. We find that the early 2000 US housing boom increased entry into entrepreneurship mostly for lower ability house-owners. We derive our results using IQ scores and an indirect measure of ability constructed from individuals’ wage history.

Suggested Citation

  • da Fonseca, João Galindo & Pannella, Pierluca, 2023. "The housing boom and selection into entrepreneurship," Labour Economics, Elsevier, vol. 85(C).
    • Handle: RePEc:eee:labeco:v:85:y:2023:i:c:s0927537123001331
    DOI: 10.1016/j.labeco.2023.102458
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    More about this item

    Keywords

    Housing boom; Entrepreneurship and selection;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • G3 - Financial Economics - - Corporate Finance and Governance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production

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