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

46 Pages Posted: 20 Dec 2018 Last revised: 26 Apr 2021

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: April 26, 2021

Abstract

We estimate the effect of transitory shocks to local income on entrepreneurship using regional windfall gains arising from the Spanish Christmas Lottery. This lottery provides a unique setting as prizes are geographically concentrated and distributed among thousands of households. We find that transitory increases in income lead to higher firm and job creation. The entrepreneurial response is more pronounced in recessions, in regions with poorer access to finance and in less economically developed regions. Firms created in winning provinces are larger and more profitable, and are likely to survive longer. These results suggest that place-based money transfers have long-lasting effects on the corporate sector.

Keywords: Entrepreneurship, Firm Creation, Disposable Income, Regional Development, Place-Based Policy, Business Cycle

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 (April 26, 2021). 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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