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What Makes an Entrepreneur? Evidence on Inheritance and Capital Constraints

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  • David Blanchflower
  • Andrew J. Oswald

Abstract

The paper studies the factors which shape entrepreneurship among young adults. It finds, using data on a British birth cohort, that the probability of self-employment depends sensitively upon whether the individual ever received a gift or inheritance. Those who were given or inherited £5,000, for example, were approximately twice as likely, ceteris paribus, to set up in business. This is consistent with, and a new test of, recent results from the US stressing the importance of capital and liquidity constraints. The paper also evaluates a number of hypotheses suggested in the literature on small businesses.

Suggested Citation

  • David Blanchflower & Andrew J. Oswald, 1990. "What Makes an Entrepreneur? Evidence on Inheritance and Capital Constraints," NBER Working Papers 3252, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:3252
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    References listed on IDEAS

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    1. Victor R. Fuchs, 1982. "Self-Employment and Labor Force Participation of Older Males," Journal of Human Resources, University of Wisconsin Press, vol. 17(3), pages 339-357.
    2. Kanbur, S M Ravi, 1982. "Entrepreneurial Risk Taking, Inequality, and Public Policy: An Application of Inequality Decomposition Analysis to the General Equilibrium Effects of Progressive Taxation," Journal of Political Economy, University of Chicago Press, vol. 90(1), pages 1-21, February.
    3. Borjas, George J & Bronars, Stephen G, 1989. "Consumer Discrimination and Self-employment," Journal of Political Economy, University of Chicago Press, vol. 97(3), pages 581-605, June.
    4. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    5. Blau, David M, 1987. "A Time-Series Analysis of Self-employment in the United State," Journal of Political Economy, University of Chicago Press, vol. 95(3), pages 445-467, June.
    6. David Blanchflower & A Oswald, 1993. "Entrepreneurship," CEP Discussion Papers dp0134, Centre for Economic Performance, LSE.
    7. George J. Borjas, 1986. "The Self-Employment Experience of Immigrants," Journal of Human Resources, University of Wisconsin Press, vol. 21(4), pages 485-506.
    8. Micklewright, John, 1989. "Choice at Sixteen," Economica, London School of Economics and Political Science, vol. 56(221), pages 25-39, February.
    9. Connolly, Sara & Micklewright, John & Nickell, Stephen, 1992. "The Occupational Success of Young Men Who Left School at Sixteen," Oxford Economic Papers, Oxford University Press, vol. 44(3), pages 460-479, July.
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    Citations

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    Cited by:

    1. Henrekson, Magnus & Johansson, Dan, 1999. "Institutional Effects on the Evolution of the Size Distribution of Firms," Small Business Economics, Springer, vol. 12(1), pages 11-23, February.
    2. Lindh, Thomas & Ohlsson, Henry, 1998. "Self-Employment and Wealth Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 44(1), pages 25-42, March.
    3. Mesnard, Alice & Ravallion, Martin, 2001. "Wealth Distribution and Self-Employment in a Developing Economy," CEPR Discussion Papers 3026, C.E.P.R. Discussion Papers.
    4. Alice Mesnard & Martin Ravallion, 2006. "The Wealth Effect on New Business Startups in a Developing Economy," Economica, London School of Economics and Political Science, vol. 73(291), pages 367-392, August.
    5. Giuliano Guerra & Roberto Patuelli, 2014. "The influence of role models on immigrant self-employment: a spatial analysis for Switzerland," International Journal of Manpower, Emerald Group Publishing, vol. 35(1/2), pages 187-215, May.
    6. Casey J. Frid & David M. Wyman & Bentley Coffey, 2016. "Effects of wealth inequality on entrepreneurship," Small Business Economics, Springer, vol. 47(4), pages 895-920, December.
    7. John Armour & Douglas Cumming, 2008. "Bankruptcy Law and Entrepreneurship," American Law and Economics Review, Oxford University Press, vol. 10(2), pages 303-350.
    8. Mesnard, Alice & Ravallion, Martin, 2001. "Is inequality bad for business : a non-linear microeconomic model of wealth effects on self-employment," Policy Research Working Paper Series 2527, The World Bank.
    9. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2000. " When Less Is More: Distinguishing between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-587, December.
    10. repec:ilo:ilowps:357068 is not listed on IDEAS
    11. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-1526, November.
    12. John Armour, 2006. "Legal capital: an outdated concept," Working Papers wp320, Centre for Business Research, University of Cambridge.

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