Household Wealth and Entrepreneurial Career Choices: Evidence from Climate Disasters

54 Pages Posted: 15 Mar 2021

See all articles by Xiao Cen

Xiao Cen

Mays Business School, Texas A&M University

Date Written: March 12, 2021

Abstract

This study investigates how household wealth affects the human capital of startups, based on U.S. Census individual-level employment data, deed records, and geographic information system (GIS) data. Using floods as a wealth shock, a regression discontinuity analysis shows inundated residents are 7% less likely to work in startups relative to their neighbors outside the flood boundary, within a 0.1-mile-wide band. The effect is more pronounced for homeowners, consistent with the wealth effect. The career distortion leads to a significant long-run income loss, highlighting the importance of self-insurance for human capital allocation.

Keywords: startup human capital, household wealth, climate risks, self-insurance

Suggested Citation

Cen, Xiao, Household Wealth and Entrepreneurial Career Choices: Evidence from Climate Disasters (March 12, 2021). Available at SSRN: https://ssrn.com/abstract=3803436 or http://dx.doi.org/10.2139/ssrn.3803436

Xiao Cen (Contact Author)

Mays Business School, Texas A&M University ( email )

430 Wehner
College Station, TX 77843-4218
United States

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