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Experimenting with Entrepreneurship: The Effect of Job-Protected Leave

Author

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  • Joshua D. Gottlieb
  • Richard R. Townsend
  • Ting Xu

Abstract

Do potential entrepreneurs remain in wage employment because of the danger that they will face worse job opportunities should their entrepreneurial ventures fail? Using a Canadian reform that extended job-protected leave to one year for women giving birth after a cutoff date, we study whether the option to return to a previous job increases entrepreneurship. A regression discontinuity design reveals that longer job-protected leave increases entrepreneurship by 1.8 percentage points. The results are driven by more educated entrepreneurs, starting firms that survive at least five years and hire paid employees, in industries where experimentation is more valuable.

Suggested Citation

  • Joshua D. Gottlieb & Richard R. Townsend & Ting Xu, 2016. "Experimenting with Entrepreneurship: The Effect of Job-Protected Leave," NBER Working Papers 22446, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:22446
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    References listed on IDEAS

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    Cited by:

    1. Eleanor W. Dillon & Christopher T. Stanton, 2017. "Self-Employment Dynamics and the Returns to Entrepreneurship," NBER Working Papers 23168, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • H50 - Public Economics - - National Government Expenditures and Related Policies - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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