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

58 Pages Posted: 20 Dec 2018 Last revised: 12 Nov 2019

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

Date Written: November 11, 2019

Abstract

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

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 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

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

Notre Dame, IN 46556-5646
United States

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