SMU SOE Seminar (August 1, 2023): America's Missing Entrepreneurs

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TOPIC:

AMERICA'S MISSING ENTREPRENEURS

ABSTRACT We use de-identified tax returns to characterize the determinants of entrepreneurship across the American population since the late 1990s. Our longitudinal data permit an analysis of which new firms end up being highly successful, allowing us to distinguish startups that are destined to remain as small businesses from star job creators. We trace the full causal graph from childhood environment through labor market entry and the accumulation of wealth during one’s career up until the point of founding. We develop research designs to evaluate the independent role and interdependence of these three factors. First, using local shocks to labor demand early in a person’s career, we estimate the effect of work experience in entrepreneurial industries on subsequent entry. Second, using a sample of early employees at highly successful startups, we estimate the effect of liquid wealth on subsequent entry. Finally, using a movers research design, we find that children exposed to more entrepreneurs are more likely to start businesses themselves. We use these multiple research designs to decompose the reduced form effects of each factor. For example, the effect of labor market experience can be separated into a direct effect and an effect operating through accumulated savings. We find that early labor market experience is the central determinant of not only the level of entrepreneurship, but also the gaps in entrepreneurship rates and returns across groups. Broadly, our results support the class of explanations that highlight “pipeline” factors as the key supply-side constraints on the number of star URG entrepreneurs. Such factors limit the number of potential entrepreneurs who might be responsive to later-stage interventions, such as liquidity support or tax breaks. Click here to view the CV.
		PRESENTER John Van Reneen London School of Economics and Political Science
		RESEARCH FIELDS Applied Microeconomics
		DATE: 1 August 2023 (Tuesday)
		TIME: 4pm - 5.30pm
		VENUE: Meeting Room 5.1, Level 5 School of Economics Singapore Management University 90 Stamford Road Singapore 178903

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