Does Career Risk Deter Potential Entrepreneurs?

91 Pages Posted: 14 Jan 2016 Last revised: 19 Feb 2021

See all articles by Joshua D. Gottlieb

Joshua D. Gottlieb

National Bureau of Economic Research (NBER); University of Chicago

Richard R. Townsend

University of California, San Diego (UCSD) - Rady School of Management

Ting Xu

University of Toronto, Rotman School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: February 18, 2021

Abstract

Do potential entrepreneurs remain in wage employment because of concerns that they will face worse job opportunities should their entrepreneurial ventures fail? Using a Canadian reform that extended job-protected leave to one year for women giving birth after a cutoff date, we study whether the option to return to a previous job increases entrepreneurship. A regression discontinuity design reveals that longer job-protected leave increases entrepreneurship by 1.9 percentage points. These entrepreneurs start incorporated businesses that hire employees—in industries where experimentation before entry has low costs and high benefits.

Keywords: Entrepreneurship, Risk-Aversion, Job-Protected Leave, Career, Real Option, Experimentation

JEL Classification: L26, J13, J16, J65, J88, H50

Suggested Citation

Gottlieb, Joshua D. and Gottlieb, Joshua D. and Townsend, Richard R. and Xu, Ting, Does Career Risk Deter Potential Entrepreneurs? (February 18, 2021). Available at SSRN: https://ssrn.com/abstract=2714577 or http://dx.doi.org/10.2139/ssrn.2714577

Joshua D. Gottlieb

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

HOME PAGE: http://papers.nber.org/authors/joshua_gottlieb

University of Chicago ( email )

1307 E. 60th St.
Chicago, IL 60637
United States

HOME PAGE: http://www.gottlieb.ca/

Richard R. Townsend (Contact Author)

University of California, San Diego (UCSD) - Rady School of Management ( email )

9500 Gilman Drive
Rady School of Management
La Jolla, CA 92093
United States

Ting Xu

University of Toronto, Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://https://sites.google.com/site/tingxu4

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
701
Abstract Views
4,381
Rank
70,118
PlumX Metrics