Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/18331 
Year of Publication: 
2005
Series/Report no.: 
DIW Discussion Papers No. 480
Publisher: 
Deutsches Institut für Wirtschaftsforschung (DIW), Berlin
Abstract: 
In this paper we investigate the link between entrepreneurship and financial constraints. We develop a dynamic partial equilibrium model of an individual utility maximization that predicts that the person is more likely to start her business when financial constraints are eased. We test this hypothesis using German Socio-Economic Panel data covering the periods 2000{2002 and measure release from financial constraints by windfall gains. The estimates confirm that the individual has higher propensity to start her business when she gets windfall gains. Furthermore, there are stronger effects for persons that have sufficient, but not very high levels of income and abilities.
Subjects: 
Entrepreneurship
windfall gains
financial constraints
JEL: 
L1
J2
G3
Document Type: 
Working Paper

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