House Prices, Household Leverage, and Entrepreneurship
This paper estimates the causal effect of changes in home equity and household leverage on entrepreneurship and business ownership. Using a large individual-level survey dataset, we show that higher home equity increases the probability of transition into entrepreneurship, while higher household leverage has a significantly positive effect on business equity ownership. These effects are stronger in "hot" housing markets where agents expect house prices to keep increasing in the future. Our results persist when we use the topological elasticity of housing supply to generate variation in home equity that is orthogonal to entrepreneurial choice.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA|
Web page: http://www.EconomicDynamics.org/
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