Self-Employment and Windfall Gains in Britain: Evidence from Panel Data

CEPR Discussion Paper Series No. 2084

Posted: 21 Jun 1999

Date Written: February 1999

Abstract

Liquidity constraints can affect self-employment in a number of ways. They can prohibit potential entrepreneurs from starting up in business, they can restrict the growth of existing entrepreneurial activities and, in the extreme, they can result in small business failure. This paper uses British panel data to investigate the effects of relaxing liquidity constraints on self-employment through the unanticipated receipt of windfall gains. The results suggest that the amount of payment received has a positive and concave effect on the probability of entering self-employment and on the performance of an existing self-employment enterprise, consistent with the liquidity constraint hypothesis.

JEL Classification: J22, J23, J31

Suggested Citation

Taylor, Mark Philip, Self-Employment and Windfall Gains in Britain: Evidence from Panel Data (February 1999). CEPR Discussion Paper Series No. 2084. Available at SSRN: https://ssrn.com/abstract=155108

Mark Philip Taylor (Contact Author)

University of Essex ( email )

Wivenhoe Park
Colchester, CO4 3SQ
United Kingdom
+44 1206 873553 (Phone)
+44 1206 873 153 (Fax)

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