IVS Seminar

Seminar with Ramana Nanda

Graduate student at MIT Sloan School of Management

“Financial Constraints and the Social-Structure of New Entrepreneurs”

Abstract:

There is a well-established literature documenting that increases in financial constraints reduce entrepreneurial activity in the economy.  But do these changes in financial constraints of potential entrepreneurs also affect the type of person who becomes an entrepreneur? For example, do such changes preclude talented individuals from starting a new business unless they have private wealth? I use a 1986 tax reform in Denmark that increased the cost of taking on personal debt to study the impact of this greater financial constraint on potential entrepreneurs.  I find that this reform not only affected the aggregate level of entrepreneurship, but also affected the types of individuals that chose to become entrepreneurs, the industries into which they entered and hence the survival and growth of their new ventures.

No registration is required. All are welcome.