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Housing wealth, liquidity constraints and self-employment

journal contribution
posted on 2023-06-08, 15:06 authored by Richard Disney, John Gathergood
This paper investigates the existence of liquidity constraints facing entrepreneurs in the United Kingdom. Using a household-level panel data set, entry to self-employment is shown to be a function of household net worth. We use inheritances and unanticipated movements in house prices as instruments for shocks to liquidity. Results indicate that inheritances are a poor instrument for liquidity constraints because both past and future inheritances predict entry to self-employment. House prices shocks are a more plausible instrument because self-employed households disproportionately re-mortgage, but our results again indicate little evidence of house price shocks unbinding liquidity constraints facing the would-be self-employed.

History

Publication status

  • Published

Journal

Labour Economics

ISSN

09275371

Publisher

Elsevier

Issue

1

Volume

16

Page range

79-88

Department affiliated with

  • Economics Publications

Full text available

  • No

Peer reviewed?

  • Yes

Legacy Posted Date

2013-06-10

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