Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery
58 Pages Posted: 20 Dec 2018 Last revised: 12 Nov 2019
Date Written: November 11, 2019
The Spanish Christmas Lottery is the largest lottery worldwide. We exploit local windfall gains arising from lottery prizes to estimate the effect of income on entrepreneurship. We find higher firm creation and greater self-employment in winning provinces. Our estimates imply that 46 firms are created for every €1,000 increase in disposable income per capita. The effect occurs in both non-tradable and tradable industries, and is more pronounced in regions with poorer access to finance. Firms created in winning provinces are larger, create more value-added, and are more likely to survive. These results suggest that local income and financial development are important drivers of entrepreneurship.
Keywords: Entrepreneurship, Firm creation, Regional income, Local demand, Financial constraints, Social-demographic, Economic activity, Self-employment
JEL Classification: D14, L26
Suggested Citation: Suggested Citation