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Consumption-Leisure Preference Structure: A New Explanation of the Evans-Jovanovic Results for Entrepreneurial Choice

  • Nobuyuki Harada


  • Kyoichi Kijima
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    This paper extends Evans and Jovanovic’s (1989) (EJ) model to explicitly consider the latent entrepreneur’s consumption-leisure preference structure, and shows that an increase in his or her assets encourages entrepreneurial activity. This result indicates that EJ’s finding may hold without the assumption of liquidity constraints. Copyright Springer 2005

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    Article provided by Springer in its journal Small Business Economics.

    Volume (Year): 24 (2005)
    Issue (Month): 2 (03)
    Pages: 187-191

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    Handle: RePEc:kap:sbusec:v:24:y:2005:i:2:p:187-191
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    1. Roger H. Gordon, 1998. "Can High Personal Tax Rates Encourage Entrepreneurial Activity?," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 49-80, March.
    2. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    3. Quadrini, Vincenzo, 1999. "The Importance of Entrepreneurship for Wealth Concentration and Mobility," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 45(1), pages 1-19, March.
    4. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May.
    5. William M. Gentry & R. Glenn Hubbard, 2000. "Entrepreneurship and Household Saving," NBER Working Papers 7894, National Bureau of Economic Research, Inc.
    6. 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.
    7. Cressy, Robert, 2000. "Credit rationing or entrepreneurial risk aversion? An alternative explanation for the Evans and Jovanovic finding," Economics Letters, Elsevier, vol. 66(2), pages 235-240, February.
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