Spillover Effects in Empirical Corporate Finance
Journal of Financial Economics,
Despite their importance, the discussion of spillover effects in empirical research often misses the rigor dedicated to endogeneity concerns. We analyze a broad set of workhorse models of firm interactions and show that spillovers naturally arise in many corporate finance settings. This has important implications for the estimation of treatment effects: i) even with random treatment, spillovers lead to a complicated bias, ii) fixed effects can exacerbate the spillover-induced bias. We propose simple diagnostic tools for empirical researchers and illustrate our guidance in an application.
Entry into Self-employment and Individuals’ Risk-taking Propensities
Small Business Economics,
Most of the existing empirical literature on self-employment decisions assumes that individuals’ risk-taking propensities are stable over time. We allow for endogeneity on both sides when examining the relationship between individual risk-taking propensities and entry into self-employment. We confirm that a greater risk-taking propensity is associated with a higher probability of entering self-employment. However, we also find evidence that entering self-employment is associated with a significant and substantial increase in an individual’s propensity to take risks. Our findings add to the growing evidence that risk-taking propensities are not only inborn, but also determined by environmental factors.
Immigration and Entrepreneurship in the United States
NBER Working Paper,
Immigration can expand labour supply and create greater competition for native-born workers. But immigrants may also start new firms, expanding labour demand. This paper uses U.S. administrative data and other data resources to study the role of immigrants in entrepreneurship. We ask how often immigrants start companies, how many jobs these firms create, and how these firms compare with those founded by U.S.-born individuals. A simple model provides a measurement framework for addressing the dual roles of immigrants as founders and workers. The findings suggest that immigrants act more as "job creators" than "job takers" and that non-U.S. born founders play outsized roles in U.S. high-growth entrepreneurship.
Physical Climate Change Risks and the Sovereign Creditworthiness of Emerging Economies
IWH Discussion Papers,
I show that rising temperatures can detrimentally affect the sovereign creditworthiness of emerging economies. To this end, I collect long-term monthly temperature data of 54 emerging countries. I calculate a country’s temperature deviation from its historical average, which approximates present day climate change trends. Running regressions from 1994m1-2018m12, I find that higher temperature anomalies lower sovereign bond performances (i.e. increase sovereign risk) significantly for countries that are warmer on average and have lower seasonality. The estimated magnitudes suggest that affected countries likely face significant increases in their sovereign borrowing costs if temperatures continue to rise due to climate change. However, results indicate that stronger institutions can make a country more resilient towards temperature shocks, which holds independent of a country’s climate.
Age and High-Growth Entrepreneurship
American Economic Review: Insights,
Many observers, and many investors, believe that young people are especially likely to produce the most successful new firms. Integrating administrative data on firms, workers, and owners, we study start-ups systematically in the United States and find that successful entrepreneurs are middle-aged, not young. The mean age at founding for the 1-in-1,000 fastest growing new ventures is 45.0. The findings are similar when considering high-technology sectors, entrepreneurial hubs, and successful firm exits. Prior experience in the specific industry predicts much greater rates of entrepreneurial success. These findings strongly reject common hypotheses that emphasize youth as a key trait of successful entrepreneurs.
Size of Training Firms – The Role of Firms, Luck, and Ability in Young Workers’ Careers
International Journal of Manpower,
The purpose of this paper is to analyze how long-run unemployment of former apprentices depends on the size of their training firm and their ability.
28.09.2017 • 36/2017
Aufschwung im Osten so stark wie in Deutschland insgesamt – Implikationen der Gemeinschaftsdiagnose Herbst 2017 für Ostdeutschland
Für das Jahr 2017 prognostiziert das Leibniz-Institut für Wirtschaftsforschung Halle (IWH) einen Anstieg des ostdeutschen Bruttoinlandsprodukts mit Berlin um 1,9% (Gemeinschaftsdiagnose für Deutschland insgesamt ebenfalls 1,9%). Der gegenüber dem Jahr 2016 (2,1%) etwas schwächere Zuwachs der Produktion resultiert lediglich aus der geringeren Anzahl von Arbeitstagen. Auch im Jahr 2018 dürfte die ostdeutsche Wirtschaft mit 2,0% so kräftig wie in Deutschland insgesamt zulegen.
TV and Entrepreneurship
We empirically analyse whether television (TV) can influence entrepreneurial identity and incidence. To identify causal effects, we utilise a quasi-natural experiment setting. During the division of Germany after WWII into West Germany with a free-market economy and the socialistic East Germany with centrally-planned economy, some East German regions had access to West German public TV that – differently from the East German TV – transmitted images, values, attitudes and view of life compatible with the free-market economy principles and supportive of entrepreneurship. We show that during the 40 years of socialistic regime in East Germany entrepreneurship was highly regulated and virtually impossible and that the prevalent formal and informal institutions broke the traditional ties linking entrepreneurship to the characteristics of individuals so that there were hardly any differences in the levels and development of entrepreneurship between East German regions with and without West German TV signal. Using both, regional and individual level data, we show then that, for the period after the Unification in 1990 which made starting an own business in East Germany, possible again, entrepreneurship incidence is higher among the residents of East German regions that had access to West German public TV, indicating that TV can, while transmitting specific images, values, attitudes and view of life, directly impact on the entrepreneurial mindset of individuals. Moreover, we find that young individuals born after 1980 in East German households that had access to West German TV are also more entrepreneurial. These findings point to second-order effects due to inter-personal and inter-generational transmission, a mechanism that can cause persistent differences in the entrepreneurship incidence across (geographically defined) population groups.