Personal Wealth, Self-Employment, and Business Ownership
Review of Financial Studies, Forthcoming
61 Pages Posted: 2 Apr 2020 Last revised: 26 Feb 2021
Date Written: February 16, 2020
We study the effect of personal wealth on entrepreneurial decisions using data on mineral payments from Texas shale drilling to individuals throughout the United States. Large cash windfalls increase business formation by 0.8 to 2.1 percentage points, but do not affect transitions to self-employment. By contrast, cash windfalls significantly extend self-employment spells, but do not affect the duration of business ownership. Our findings help reconcile contrasting findings in prior work: liquidity constraints have different effects on entrepreneurial activity that may depend on the entrepreneur’s motivations.
Keywords: self-employment; entrepreneurship; personal wealth; oil and gas; mineral rights
JEL Classification: L26, G51, G39
Suggested Citation: Suggested Citation