FRIC/Finance Seminar with David Thesmar, HEC Paris
FRIC Center for Financial Frictions and the Department of Finance are proud to announce the upcoming seminar with David Thesmar, HEC Paris
David Thesmar will present:
Johan Hombert, HEC Paris
Antoinette Schoar, MIT-Sloan, NBER, and CEPR
David Sraer, Princeton University and NBER
David Thesmar, HEC Paris and CEPR
We study a large-scale French reform that provided generous downside insurance for unemployed individuals starting a business. We study whether this reform affects the composition of people who are drawn into entrepreneurship. New firms started in response to the reform are, on average, smaller, but have similar growth expectations and education levels compared to start-ups before the reform. They are also as likely to survive or to hire. In aggregate, the effect of the reform on employment is largely offset by large crowd-out effects. However, because new firms are more productive, the reform has the impact of raising aggregate productivity. These results suggest that the dispersion of entrepreneurial abilities is small in the data, so that the facilitation of entry leads to sizable Schumpeterian dynamics at the firm-level.