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

57 Pages Posted: 20 Dec 2018 Last revised: 12 Aug 2020

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

University of Notre Dame - Mendoza College of Business

Multiple version iconThere are 2 versions of this paper

Date Written: November 11, 2019

Abstract

We exploit regional windfall gains arising from the Spanish Christmas Lottery to estimate the effect of disposable income on entrepreneurial activity. We find higher firm creation in winning provinces. Our estimates imply that 46 firms are created for every €1,000 increase in disposable income per capita. We show that the effect is similar in 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. Our results suggest that financial constraints restrict firm entry and post-entry growth.

Keywords: Entrepreneurship, Firm creation, Regional income, Local demand, Financial constraints, Social-demographic, Economic activity, Self-employment

JEL Classification: D14, L26

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 (November 11, 2019). 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 the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 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

University of Notre Dame - Mendoza College of Business ( email )

Notre Dame, IN 46556-5646
United States

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