Housing wealth, liquidity constraints and self-employment

Disney, Richard and Gathergood, John (2009) Housing wealth, liquidity constraints and self-employment. Labour Economics, 16 (1). pp. 79-88. ISSN 09275371

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Abstract

This 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.

Item Type: Article
Schools and Departments: School of Business, Management and Economics > Economics
Subjects: H Social Sciences > HB Economic theory. Demography
Depositing User: Catrina Hey
Date Deposited: 10 Jun 2013 16:05
Last Modified: 10 Jun 2013 16:05
URI: http://sro.sussex.ac.uk/id/eprint/45191
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