Does Career Risk Deter Potential Entrepreneurs?

70 Pages Posted: 25 Jul 2016 Last revised: 17 Apr 2019

See all articles by Joshua D. Gottlieb

Joshua D. Gottlieb

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

Richard Townsend

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

Ting Xu

University of Virginia - Darden School of Business

Multiple version iconThere are 2 versions of this paper

Date Written: July 2016

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. The effects are concentrated among those with more human and financial capital.

Suggested Citation

Gottlieb, Joshua D. and Townsend, Richard and Xu, Ting, Does Career Risk Deter Potential Entrepreneurs? (July 2016). NBER Working Paper No. w22446. Available at SSRN: https://ssrn.com/abstract=2813914

Joshua D. Gottlieb (Contact Author)

University of Chicago ( email )

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

National Bureau of Economic Research (NBER)

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

Richard Townsend

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 Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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