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Self-employment and windfall gains in Britain: Evidence from panel data

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Author Info
Mark P. Taylor () (Institute for Social and Economic Research, University of Essex, UK)

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Abstract

Liquidity constraints can affect self-employment in a number of ways. They can prohibit potential entrepreneurs from starting up in business,they can restrict the growth of existing entrepreneurial activities and, in the extreme, they can result in small business failure. This paper uses British panel data to investigate the effects of relaxing liquidity constraints on self-employment through the unanticipated receipt of windfall gains. The results suggest that the amount of payment received has a positive and concave effect on the probability of entering self-employment and on the performance of an existing self-employment enterprise, consistent with the liquidity constraint hypothesis.

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Paper provided by Institute for Labour Research in its series ILR working papers with number 025.

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Length: 37
Date of creation: Sep 1998
Date of revision:
Handle: RePEc:esl:ilrdps:025

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Postal: Institute for Labour Research University of Essex, Wivenhoe Park Colchester, Essex CO4 3SQ UK
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Postal: Institute for Labour Research University of Essex, Wivenhoe Park Colchester, Essex CO4 3SQ UK
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Web: http://www.essex.ac.uk/ilr/discuss/index.htm

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Taylor, Mark P, 1996. "Earnings, Independence or Unemployment: Why Become Self-Employed?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(2), pages 253-66, May.
  2. Bernard F. Lentz & David N. Laband, 1990. "Entrepreneurial Success and Occupational Inheritance among Proprietors," Canadian Journal of Economics, Canadian Economics Association, vol. 23(3), pages 563-79, August. [Downloadable!] (restricted)
  3. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, vol. 47(1), pages 153-61, January. [Downloadable!] (restricted)
  4. Taylor, Mark P, 1999. "Survival of the Fittest? An Analysis of Self-Employment Duration in Britain," Economic Journal, Royal Economic Society, vol. 109(454), pages C140-55, March. [Downloadable!] (restricted)
  5. Bates, Timothy, 1990. "Entrepreneur Human Capital Inputs and Small Business Longevity," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 551-59, November. [Downloadable!] (restricted)
  6. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-35, June. [Downloadable!] (restricted)
  7. Holtz-Eakin, Douglas & Joulfaian, David & Rosen, Harvey S, 1994. "Sticking It Out: Entrepreneurial Survival and Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 102(1), pages 53-75, February. [Downloadable!] (restricted)
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  8. Audretsch, David B, 1991. "New-Firm Survival and the Technological Regime," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 441-50, August. [Downloadable!] (restricted)
  9. Jovanovic, Boyan, 1982. "Selection and the Evolution of Industry," Econometrica, Econometric Society, vol. 50(3), pages 649-70, May. [Downloadable!] (restricted)
  10. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-26, November. [Downloadable!] (restricted)
  11. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Davis, Steven J. & Henrekson, Magnus, 2007. "Economic Perfomance and Work Activity in Sweden after the Crisis of the Early 1990s," Working Paper Series 687, Research Institute of Industrial Economics. [Downloadable!]
    Other versions:
  2. David G. Blanchflower & Chris Shadforth, 2007. "Entrepreneurship in the UK," IZA Discussion Papers 2818, Institute for the Study of Labor (IZA). [Downloadable!]
  3. Constant, Amelie & Shachmurove, Yochanan & Zimmermann, Klaus F, 2004. "What Makes an Entrepreneur and Does it Pay? Native Men, Turks and Other Migrants in Germany," CEPR Discussion Papers 4207, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Constant, Amelie F., 2008. "Businesswomen in Germany and Their Performance by Ethnicity: It Pays to Be Self-Employed," IZA Discussion Papers 3644, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  5. Kræn Blume Jensen & Mette Ejrnæs & Helena Skyt Nielsen & Allan Würtz, 2003. "Self-Employment among Immigrants: A Last Resort?," CAM Working Papers 2003-08, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics. [Downloadable!]
    Other versions:
  6. Andrew E. Burke & Michael A. Nolan & Felix R. FitzRoy, . "What makes a Die-Hard Entrepreneur? Trying, or Persisting in, Self-Employment," Papers on Entrepreneurship, Growth and Public Policy 2005-23, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
  7. Henrekson, Magnus, 2002. "Entrepreneurship: A Weak Link in the Welfare State," Working Paper Series in Economics and Finance 518, Stockholm School of Economics, revised 04 Mar 2005. [Downloadable!]
    Other versions:
  8. Roy Thurik & Isabel Grilo, 2005. "Determinants of entrepreneurial engagement levels in Europe and the US," Papers on Entrepreneurship, Growth and Public Policy 2005-25, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group. [Downloadable!]
    Other versions:
  9. Alexander Muravyev & Dorothea Schäfer & Oleksandr Talavera, 2007. "Entrepreneurs' Gender and Financial Constraints: Evidence from International Data," Discussion Papers of DIW Berlin 706, DIW Berlin, German Institute for Economic Research. [Downloadable!]
    Other versions:
  10. Simon Parker & Mirjam van Praag, 2004. "Schooling, Capital Constraints and Entrepreneurial Performance," Tinbergen Institute Discussion Papers 04-106/3, Tinbergen Institute, revised 07 Mar 2005. [Downloadable!]
  11. Andrew Burke & Felix FitzRoy & Michael Nolan, 2008. "What makes a die-hard entrepreneur? Beyond the ‘employee or entrepreneur’ dichotomy," Small Business Economics, Springer, vol. 31(2), pages 93-115, August. [Downloadable!] (restricted)
    Other versions:
  12. Flores-Romero, Manuel G, 2004. "Survival Of The Small Firm And The Entrepreneur Under Demand And Efficiency Uncertainty," The Warwick Economics Research Paper Series (TWERPS) 700, University of Warwick, Department of Economics. [Downloadable!]
  13. Robert W. Fairlie & Harry A. Krashinsky, 2006. "Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited," IZA Discussion Papers 2201, Institute for the Study of Labor (IZA). [Downloadable!]
  14. Constant, Amelie, 2004. "Immigrant versus Native Businesswomen: Proclivity and Performance," IZA Discussion Papers 1234, Institute for the Study of Labor (IZA). [Downloadable!]
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