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Part-Time Entrepreneurship and Wealth Effects: New Evidence from the Panel Study of Entrepreneurial Dynamics

Author

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  • Kameliia Petrova

    (Boston College)

Abstract

Why do people become part-time entrepreneurs? Are they credit constrained? Previous studies on entrepreneurship do not deal with part- timers. In contrast, a recent survey on the establishment of new businesses reports that 80 percent of nascent entrepreneurs also hold regular wage jobs. I develop a model of entrepreneurial choice in which individuals decide not only how much capital to invest, but also what proportion of time to spend in business. The model allows me to test whether entrepreneurs are credit constrained. I use a new and unique data set, which looks at how nascent entrepreneurs divide their time between their own businesses and other jobs. My empirical findings show that part-time entrepreneurs do not appear to be constrained. This is not to say that no entrepreneur is credit constrained. It might be that a lot of part-time business owners operate in less capital intensive sectors. Instead, the result points to the marginal entrepreneur. If credit constraints are crucial, wealthier entrepreneurs should shift their time a lot more into their businesses, because the credit constraints would have been relaxed.

Suggested Citation

  • Kameliia Petrova, 2005. "Part-Time Entrepreneurship and Wealth Effects: New Evidence from the Panel Study of Entrepreneurial Dynamics," Microeconomics 0510006, EconWPA, revised 03 Nov 2005.
  • Handle: RePEc:wpa:wuwpmi:0510006
    Note: Type of Document - pdf; pages: 31
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0510/0510006.pdf
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    References listed on IDEAS

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    Cited by:

    1. Dorothea Schäfer & Oleksandr Talavera, 2005. "Entrepreneurship, Windfall Gains and Financial Constraints: The Case of Germany," Discussion Papers of DIW Berlin 480, DIW Berlin, German Institute for Economic Research.
    2. Jeffrey Campbell & Mariacristina De Nardi, 2009. "A conversation with 590 Nascent Entrepreneurs," Annals of Finance, Springer, vol. 5(3), pages 313-340, June.
    3. Berna Demiralp & Johanna Francis, 2008. "Wealth, Industry and the Transition to Entrepreneurship," Fordham Economics Discussion Paper Series dp2008-09, Fordham University, Department of Economics.

    More about this item

    Keywords

    Start-ups; Entrepreneurship; Liquidity Constraints;

    JEL classification:

    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups

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