House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data
39 Pages Posted: 1 Aug 2015 Last revised: 25 Jul 2022
Date Written: June 30, 2022
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 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.
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