Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/258954 
Year of Publication: 
2021
Series/Report no.: 
CEBI Working Paper Series No. 10/21
Publisher: 
University of Copenhagen, Department of Economics, Center for Economic Behavior and Inequality (CEBI), Copenhagen
Abstract: 
We exploit a mortgage reform that differentially unlocked home equity across the Danish population and study how this impacted selection into entrepreneurship. We find that increased entry was concentrated among entrepreneurs whose firms were founded in industries where they had no prior work experience. In addition, we find that marginal entrants benefiting from the reform had higher pre-entry earnings and that a significant share of entrants started longer-lasting firms. Our results are most consistent with the view that housing collateral enabled high ability individuals with less-well-established track records to overcome credit rationing and start new firms, rather than just leading to `frivolous entry' by those without prior industry experience.
Subjects: 
credit constraints
entrepreneurship
household wealth
mortgage finance
JEL: 
D14
D31
G21
L25
L26
Document Type: 
Working Paper

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