Monitoring Costs, Credit Constraints and Entrepreneurship

Testing for Credit Constraints in Entrepreneurship

Common tests for credit constraints are highly sensitive to econometric assumptions. Tests of the relationship between wealth and entry into entrepreneurship require strong assumptions about the distribution of unobserved ability, and the results change when the definition of entrepreneurship changes. Tests of the relationship between entrepreneurs’ productivity and wealth can produce spurious ...

Credit Cards, Race, and Entrepreneurship

We use the decision by 14 states to remove credit card interest rate caps after the U.S. Supreme Court's 1978 Marquette decision as a natural experiment to explore the impact of credit card availability on black entrepreneurship. Using self-employment as a measure of entrepreneurship, we use Current Population Survey data from 1971-1985 to show that removing state-level rate caps led to increas...

Financing Constraints and Entrepreneurship

Credit Constraints, Job Mobility and Entrepreneurship: Evidence from a Property Reform in China∗ Job Market Paper

In 1994, the Chinese government began a program that offered state employees living in state-owned housing the opportunity to buy their homes at subsidized prices. This paper analyzes the impact of housing policy and the creation of private property on individuals’ labor market decisions with a focus on entrepreneurship. Using the reform as an exogenous change in the mobility costs and credit c...

Credit Constraints, Job Mobility, and Entrepreneurship: Evidence From a Property Reform in China

This paper provides new evidence on the impact of private property rights and employer-provided housing on entrepreneurship. I find an increase in self-employment following a reform in urban China that allowed state employees who were renting state-owned housing the opportunity to buy their homes at subsidized prices. I develop a model of job choice to test two mechanisms that might explain how...