Pollution and Entrepreneurship: Evidence from Cicada Emergence

Abstract

This paper examines the impact of pollution on entrepreneurial activity. I use the recurring cicada emergence cycles in the U.S. as exogenous shocks to show that pollution caused by pesticide use decreases entrepreneurial activity and quality by 3%. I find that pesticide use is linked to the households' decision to start a business through the impact of pollutants on health. Households exposed to an exogenous increase in pesticides experience an increase in health problems, medical expenses, and a decrease in health status. I also find evidence for the "job-lock" effect of employer-based insurance coverage on entrepreneurial activity.

Keywords: entrepreneurship, household finance, pesticides, pollution

JEL Classification: I10, L26, Q10, Q53