Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/80679
Authors: 
Bracke, Philippe
Hilber, Christian
Silva, Olmo
Year of Publication: 
2013
Series/Report no.: 
IZA Discussion Paper 7417
Abstract: 
We study the link between homeownership and entrepreneurship using a model of occupational choice and housing tenure where homeowners commit a fixed budget to mortgage payments. Our model predicts that: (i) mortgage commitments, by amplifying risk aversion, diminish the likelihood that homeowners start a business; (ii) the negative link between homeownership and entrepreneurship is increasing in mortgage debt; and (iii) the negative relation is more pronounced for entrepreneurs in risky sectors. Exploiting the longitudinal dimension of the British Household Panel Survey to control for unobservables, we test and confirm these predictions. Leveraged home-buyers are 30% less likely to become entrepreneurs.
Subjects: 
entrepreneurship
homeownership
commitment
JEL: 
L26
D14
G11
R21
Document Type: 
Working Paper

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