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The Long-Term Impact of Inequality on Entrepreneurship and Job Creation

Author

Listed:
  • Roxana Gutierrez-Romero

    () (Departament d’Economia Aplicada, Universitat Autonama de Barcelona)

  • Luciana Méndez Errico

    () (Departament d'Economia Aplicada, Universitat Autonoma de Barcelona)

Abstract

We assess the extent to which historical levels of inequality affect the likelihood of businesses being created, surviving and of these creating jobs overtime. To this end, we build a pseudo-panel of entrepreneurs across 48 countries using the Global Entrepreneurship Monitor Survey over 2001-2009. We complement this pseudo-panel with historical data of income distribution and indicators of current business regulation. We find that in countries with higher levels of inequality in the 1700s and 1800s, businesses today are more likely to die young and create fewer jobs. Our evidence supports economic theories that argue initial wealth distribution influences countries’ development path, having therefore important policy implications for wealth redistribution.

Suggested Citation

  • Roxana Gutierrez-Romero & Luciana Méndez Errico, 2015. "The Long-Term Impact of Inequality on Entrepreneurship and Job Creation," Working Papers wpdea1501, Department of Applied Economics at Universitat Autonoma of Barcelona.
  • Handle: RePEc:uab:wprdea:wpdea1501
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    File URL: http://www.ecap.uab.es/RePEc/doc/wpdea1501.pdf
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Created by history
      by ? in Stumbling and Mumbling on 2015-02-11 23:05:00
    2. 'The Long-Term Impact of Inequality on Entrepreneurship and Job Creation'
      by Mark Thoma in Economist's View on 2015-02-11 17:21:00

    More about this item

    Keywords

    Entrepreneurship; income distribution; job creation; pseudo-panel; instrumental variables;

    JEL classification:

    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • D3 - Microeconomics - - Distribution
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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