Self-employment and Intergenerational Transfers: Liquidity Constraints or Family Environment?

Self-employment and Intergenerational Transfers: Liquidity Constraints or Family Environment? Anne Laferrère and Peter McEntee We examine the determinants of entrepreneurship using data on intergenerational transfers of wealth, education and what we call informal human capital. We are interested in the respective importance of the level of assets which relax liquidity constraints and of an entrepreneurial environment, the policy implications being quite different. The probability to become self-employed is twice as high for a son of selfemployed than for a son of wage worker. We do find that liquidity constraints are less binding for sons of entrepreneurs than they are for sons of wage workers who want to become self-employed. Also human capital does not play the same role, even excluding those who took over the family business. So the family environment is important even outside monetary transfers. However we also find that, whatever the family background, parents help entrepreneurs to have access to credit by providing collateral, so indirectly relaxing the constraints.