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Homeownerhip and Entrepreneurship

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  • Philippe Bracke
  • Christian Hilber
  • Olmo Silva

Abstract

We study the link between homeownership and entrepreneurship by exploiting the longitudinal dimension of the British Household Panel Survey (BHPS) and constructing a detailed monthly-spell dataset that tracks individuals‟ job history and tenure choice, coupled with other time-varying characteristics. Our fixed-effects estimates show that purchasing a house reduces the likelihood of starting a business by 20-25%. This result is driven by homeowners with mortgages and persists for several years after entering homeownership. The negative link can be rationalized by portfolio considerations: leveraged housing investments crowd out entrepreneurial investments. Alternative explanations based on credit constraints find little support in our data.

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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0103.

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Date of creation: Apr 2012
Date of revision:
Handle: RePEc:cep:sercdp:0103
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

Keywords: Entrepreneurship; homeownership; panel estimation;

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Find related papers by JEL classification:
  • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
  • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
  • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
  • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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Cited by:

  1. Christian A. L. Hilber & Jan Rouwendal & Wouter Vermeulen, 2014. "Local economic conditions and the nature of new housing supply," LSE Research Online Documents on Economics 61872, London School of Economics and Political Science, LSE Library.
  2. Sari Kerr & William R. Kerr & Ramana Nanda, 2015. "House Money and Entrepreneurship," NBER Working Papers 21458, National Bureau of Economic Research, Inc.
  3. Faggio, Giulia & Silva, Olmo, 2014. "Self-employment and entrepreneurship in urban and rural labour markets," Journal of Urban Economics, Elsevier, vol. 84(C), pages 67-85.
  4. Giulia Faggio & Olmo Silva, 2012. "Does Self-Employment Measure Entrepreneurship? Evidence from Great Britain," SERC Discussion Papers 0109, Spatial Economics Research Centre, LSE.
  5. Thais Lærkholm Jensen & Søren Leth-Petersen & Ramana Nanda, 2014. "Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform," NBER Working Papers 20583, National Bureau of Economic Research, Inc.
  6. Hilber , Christian A. L. & Schöni, Olivier, 2016. "Housing Policies in the United Kingdom, Switzerland, and the United States: Lessons Learned," ADBI Working Papers 569, Asian Development Bank Institute.
  7. Weber, Jeremy G. & Key, Nigel D., 2013. "Does proprietor wealth influence small business decisions? Land appreciation and farm business borrowing, land ownership, and output," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150408, Agricultural and Applied Economics Association.
  8. Daly, Moira, 2015. "The long term returns of attempting self-employment with regular employment as a fall back option," Labour Economics, Elsevier, vol. 35(C), pages 26-52.

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