Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery

54 Pages Posted: 20 Dec 2018

See all articles by Vicente J. Bermejo

Vicente J. Bermejo

ESADE Business School

Miguel A. Ferreira

Nova School of Business and Economics; European Corporate Governance Institute (ECGI); Centre for Economic Policy Research (CEPR)

Daniel Wolfenzon

Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Rafael Zambrana

Nova School of Business and Economics

Date Written: December 6, 2018

Abstract

We study the effect of disposable income on entrepreneurial activity. We identify the effect using the randomized assignment of monetary prizes provided by the Spanish Christmas Lottery. The lottery has a large economic impact on a local community and winners tend to be geographically concentrated as tickets are typically sold by one outlet. We find higher firm creation and self-employment in winning provinces. This increase is also present in firms that are less dependent on local demand, and it is more pronounced in regions with lower access to finance. Conditional on entry, firms created in winning provinces are larger, create more value-added, rely more on equity, and are more likely to survive. Our results suggest that economic conditions and financial constraints are important drivers of entrepreneurial activity.

Keywords: Entrepreneurship, Disposable Income, Lottery, Financial Constraints

JEL Classification: G31, G38, J24

Suggested Citation

Bermejo, Vicente J. and Ferreira, Miguel Almeida and Wolfenzon, Daniel and Zambrana, Rafael, Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery (December 6, 2018). Available at SSRN: https://ssrn.com/abstract=3297158 or http://dx.doi.org/10.2139/ssrn.3297158

Vicente J. Bermejo

ESADE Business School ( email )

Av. de Pedralbes, 60-62
Barcelona, 08034
Spain

Miguel Almeida Ferreira (Contact Author)

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, 1099-032
Portugal

European Corporate Governance Institute (ECGI) ( email )

c/o ECARES ULB CP 114
B-1050 Brussels
Belgium

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

Daniel Wolfenzon

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Rafael Zambrana

Nova School of Business and Economics ( email )

Campus de Campolide
Lisbon, Lisbon 1099-032
Portugal

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