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Housing wealth, liquidity constraints and self-employment
journal contribution
posted on 2023-06-08, 15:06 authored by Richard Disney, John GathergoodThis paper investigates the existence of liquidity constraints facing entrepreneurs in the United Kingdom. Using a household-level panel data set, entry to self-employment is shown to be a function of household net worth. We use inheritances and unanticipated movements in house prices as instruments for shocks to liquidity. Results indicate that inheritances are a poor instrument for liquidity constraints because both past and future inheritances predict entry to self-employment. House prices shocks are a more plausible instrument because self-employed households disproportionately re-mortgage, but our results again indicate little evidence of house price shocks unbinding liquidity constraints facing the would-be self-employed.
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Publication status
- Published
Journal
Labour EconomicsISSN
09275371Publisher
ElsevierExternal DOI
Issue
1Volume
16Page range
79-88Department affiliated with
- Economics Publications
Full text available
- No
Peer reviewed?
- Yes
Legacy Posted Date
2013-06-10Usage metrics
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