House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data

39 Pages Posted: 1 Aug 2015 Last revised: 25 Jul 2022

See all articles by Sari Pekkala Kerr

Sari Pekkala Kerr

Wellesley College

William Kerr

Harvard University - Entrepreneurial Management Unit

Ramana Nanda

Imperial College Business School; Harvard University - Entrepreneurial Management Unit

Multiple version iconThere are 2 versions of this paper

Date Written: June 30, 2022

Abstract

During 1992-2007, house price growth is strongly correlated with local entrepreneurship. We show with Census Bureau data that most of this entry is related to construction and real estate; these entrants tend to be small and short-lived. Using a 1998 Texas reform that allowed home equity lending for the Â…rst time in the state, we isolate that entrepreneurship through the collateral channel tends to be longer-lived and more balanced across sectors. The collateral channel is a tenth or less of the entry associated with house price increases, driven by a small share of homeowners who are constrained without price growth.

Keywords: house prices, mortgages, collateral channel, entrepreneurship, entry.

JEL Classification: E44, G21, L26, M13, R12, R31, R32.

Suggested Citation

Kerr, Sari Pekkala and Kerr, William R. and Nanda, Ramana, House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data (June 30, 2022). Harvard Business School Entrepreneurial Management Working Paper No. 15-069, Available at SSRN: https://ssrn.com/abstract=2638045 or http://dx.doi.org/10.2139/ssrn.2638045

Sari Pekkala Kerr

Wellesley College ( email )

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Ramana Nanda (Contact Author)

Imperial College Business School ( email )

South Kensington Campus
Exhibition Road
London SW7 2AZ, SW7 2AZ
United Kingdom

Harvard University - Entrepreneurial Management Unit ( email )

Boston, MA 02163
United States

HOME PAGE: http://www.people.hbs.edu/rnanda

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