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

Author

Listed:
  • Ferreira, Miguel
  • Bermejo, Vicente
  • Wolfenzon, Daniel
  • Zambrana, Rafael

Abstract

The Spanish Christmas Lottery is the largest lottery worldwide. We exploit local windfall gains arising from lottery prizes to estimate the effect of income on entrepreneurship. We find higher firm creation and greater self-employment in winning provinces. Our estimates imply that 46 firms are created for every €1,000 increase in disposable income per capita. The effect occurs in both non-tradable and tradable industries, and is more pronounced in regions with poorer access to finance. Firms created in winning provinces are larger, create more value-added, and are more likely to survive. These results suggest that local income and financial development are important drivers of entrepreneurship.

Suggested Citation

  • Ferreira, Miguel & Bermejo, Vicente & Wolfenzon, Daniel & Zambrana, Rafael, 2020. "Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery," CEPR Discussion Papers 14638, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:14638
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    Cited by:

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    2. Cookson, J. Anthony & Gilje, Erik P. & Heimer, Rawley Z., 2022. "Shale shocked: Cash windfalls and household debt repayment," Journal of Financial Economics, Elsevier, vol. 146(3), pages 905-931.

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    More about this item

    Keywords

    entrepreneurship; Firm creation; Aggregate income; Local demand; Financial development; Self-employment; Public policy;
    All these keywords.

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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