Workplace Flexibility and Entrepreneurship
38 Pages Posted: 13 Mar 2018
Date Written: March 8, 2018
Working at home benefits workers with low fixed costs and the ability to engage in joint market and household production. We evaluate a large-scale reform in Singapore that allows the possibility of business creation at one’s residential property and study whether the option of home-based entrepreneurship spurs entrepreneurial activities. Difference-in-difference estimate shows that the reform leads to a significantly higher level of business creation. The effect is more pronounced for low-income individuals, implying that financial constraint is a barrier for firm creation. Additional new firms in response to the reform have a higher survival rate, choose industries with higher productivity and lower risk. The reform also encourages entrepreneurs to become serial entrepreneurs, and they open a larger business with similar survival rate for their second firm. These results show that the home office scheme effectively spurs entrepreneurial activities and attract more entry into self-employment without significantly lowering the average quality of the pool. We also exploit the regional variation in the residential land density to assess the impact on aggregate economic outcomes. Regions more exposed to the reform experience higher rate of price growth.
Keywords: Entrepreneurship, Home-Base Work, Experimentation
JEL Classification: M13, L26
Suggested Citation: Suggested Citation