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Homeownerhip and Entrepreneurship

  • Philippe Bracke
  • Christian Hilber
  • Olmo Silva

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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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0103.pdf
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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
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Handle: RePEc:cep:sercdp:0103
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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