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Entrepreneurial Spawning from Remote Work

Author

Listed:
  • Alan Kwan
  • Ben Matthies
  • Richard R. Townsend
  • Ting Xu

Abstract

Using a novel firm-level remote work measure created from big data on Internet activity, we show that firms with higher remote work during the pandemic are more likely to see their employees becoming entrepreneurs. This effect holds both unconditionally and relative to other types of job turnovers. We establish causality using instrumental variables and a panel event study. The marginally created businesses are higher quality than the average new firm. The effect is not driven by employee selection, preference change, or forced turnover. Rather, remote work increases spawning by providing the time and downside protection needed for entrepreneurial experimentation.

Suggested Citation

  • Alan Kwan & Ben Matthies & Richard R. Townsend & Ting Xu, 2025. "Entrepreneurial Spawning from Remote Work," NBER Working Papers 33774, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:33774
    Note: CF LS PR
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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