measuring entrepreneurship over time abstract this article is a review of three measurement issues that impact the study of entrepreneurship over time 1 level of analysis difference between firms and individuals 2 differences between rate and stock measures and 3 the effects of choosing particular time frames on subsequent analytical results based on theory that views entrepreneurship as depending on ownership rights hawley 1907 this article develops a longitudinal measure of entrepreneurship in the united states the number of organizations per capita the problems and advantages of using a measure based on organizations per capita as an indicator of entrepreneurship is examined understanding how and what is being measured in studies of changes in entrepreneurship over time is an important issue for academic researchers and public policy makers measurement of changes in entrepreneurship over time can shed light on important research questions and public policy issues about entrepreneurship for example is entrepreneurship increasing in the united states if entrepreneurship is increasing is this trend comparable to any previous time periods or is the current increase in entrepreneurship a new or unique social phenomenon what influences changes in entrepreneurship over time the choice of certain measures of entrepreneurship is likely to influence the answers to these questions for example the measures used in an entrepreneurship study are an implicit specification of one s views of entrepreneurship e g entrepreneurship as self employment or firm creation and few measures of entrepreneurship reflect critical changes in important environmental influences e g technological change because of short measurement time frames therefore determining the contribution of entrepreneurship to the well being of an economy is dependent on understanding what measures of entrepreneurship are utilized for making these evaluations and the time frame used for these measures we review three measurement issues that impact the study of entrepreneurship over time 1 level of analysis differences between firms and individuals 2 differences between rate and stock measures and 3 the effects of choosing particular time frames on subsequent analytical results based on theory that views entrepreneurship as depending on ownership rights hawley 1907 this article develops a longitudinal measure of entrepreneurship in the united states the number of organizations per capita studies of entrepreneurship focus on either individual level activity e g self employment or on firm level activity e g new incorporations self employment research focuses on individuals who employ themselves that is individuals who report wages but not wages paid to them by other individuals or organizations in most studies of the self employed firm founders would therefore be classified as wage earners and not as entrepreneurs new firm research focuses on the rate of new firm entrants typically measured as new incorporations so such businesses as proprietorships or partnerships will not be counted a rate is a change from one state to another e g the number of people who become self employed for a specific year or the number of new firms created for a specific year whereas a stock specifies a particular level e g much like a stock of inventory such as the number of self employed or a particular number of firms for a specific time period it is important to recognize that entry into business does not necessarily guarantee remaining in business for example although the number of people who become self employed may increase for a specific year the number of people who remain self employed may actually decrease if more of the self employed fail to remain in business than those that enter the stock of the self employed can decrease if the outflow of self employed is greater than the inflow for those persons interested in whether entrepreneurial activity results in wealth creation either individually or societally the realization that entry into business may not lead to a sustainable business and therefore no creation of wealth should be a signal that measuring rates of business formation and rates of self employment may not be appropriate for this type of research the factors that drive changes in the rate of entrepreneurship are not likely to be manifest over short timeperiods changes in values attitudes technology government regulations and world economic and social changes have a significant influence on changes in entrepreneurship over time studies that have measured entrepreneurship over recent time periods are therefore likely to miss the influence of these variables we introduce a measure of entrepreneurship organizations per capita based on a theory of entrepreneurship as ownership this measure shows the stock of organizations in the u s economy over time from 1857 to 1992 the problems and advantages of using a measure based on organizations per capita as an indicator of entrepreneurship is examined we conclude with some suggestions for improving entrepreneurship research by recognizing the limitations of particular longitudinal entrepreneurship measures and by challenging the field to seek convergent validity among measures

wealth accumulation over the life cycle and precautionary savings this article constructs and simulates a life cycle model of wealth accumulation and estimates the parameters of the utility function the rate of time preference and the coefficient of risk aversion by matching the simulated median wealth profiles with those observed in the panel study of income dynamics and in the survey of consumer finances the estimates imply a low degree of patience and a high degree of risk aversion the results are used to study the importance of precautionary savings in explaining wealth accumulation they imply that wealth accumulation is driven mostly by precautionary motives at the beginning of the life cycle whereas savings for retirement purposes become significant only closer to retirement

portfolio choice and liquidity constraints we study the infinite horizon model of household portfolio choice under liquidity constraints and revisit the portfolio specialization puzzle we show why the puzzle is robust to several model variations and argue that positive correlation between earnings shocks and stock returns is unlikely to provide an empirically plausible resolution we find that relatively small fixed costs for stock market entry are sufficient to deter stockholding because for a plausible range of parameter values households can achieve desired consumption smoothing with small or zero holdings of stocks such costs could arise from informational considerations sign up fees and investor inertia

energy efficiency and financial literacy abstract financial literacy explains anomalies in a wide range of consumers financial decisions we extend the literature on financial literacy by examining its role in the purchase of energy consumer durables a setting purported to suffer from sub optimal levels of investment due to consumer mistakes we augment a standard choice experiment for purchasing a hot water system with data on financial literacy financial literacy is an economically important and statistically significant determinant of investment in energy efficiency this result is robust to incorporating individual discount rates and risk aversion as well as standard controls such as income and education indicating that financial literacy is not merely a proxy for standard demographic characteristics financial literacy also makes choices more consistent with standard consumer preferences and increases the probability that respondents select investments with the lowest lifetime discounted costs the results establish low financial literacy as a mechanism driving low investment in energy efficiency

the effects of risk on self employment the effects of sectoral risk on the propensity to become self employed are analysed in contrast to previous studies which assume risk is concentrated only in the self employment sector a general equilibrium model is constructed in which uninsurable risk exists in both the paid and self employed sectors it is shown that when agents wish to mix self employment and employee participation the effects of sectoral risk on the optimal self employment decision is ambiguous this result disappears if agents choose instead to participate in one sector alone

survival ambiguity and welfare abstract nearly all life cycle models adopt yaari s 1965 assumption that individuals know the survival probabilities that they face given that an individual s exact survival probabilities are likely unknown we explore the implications of relaxing this assumption if there is no annuity market then the welfare cost of survival ambiguity is large and regressive ambiguity neutral individuals would pay as much as 1 of total lifetime consumption for immediate resolution of ambiguity and the bottom income quintile is 4 times worse off than the top quintile alternatively with the availability of competitive annuity contracts survival ambiguity is welfare improving because it allows competitive insurance companies to pool risk across survival types even though social security and annuities share some properties social security does not help to hedge survival ambiguity

innovations and r d in northern ireland manufacturing a schumpeterian approach harris r and trainor m 1995 innovations and r d in northern ireland manufacturing a schumpeterian approach reg studies 29 593 604 given the importance of r d and innovative outputs and the change in regional policy in the 1980s to encourage an enterprise culture based inter alia on a high rate of innovations this paper attempts to explain the determinants of inventive activities in one of the most disadvantaged regions of the united kingdom a model incorporating the impact of market structure is estimated and it is found that in northern ireland higher r d spending leads to a higher probability of innovating while r d itself is positively affected by higher post innovation price cost margins thus r d spending and innovation outputs are beneficial to profitability and thus presumably the long term growth of firms however while market structure is important the direct effects of monopoly power are if anything negative thus the results presented by geroski 1990 are support

planning and financial literacy how do women fare many older us households have done little or no planning for retirement and there is a substantial population that seems to undersave for retirement of particular concern is the relative position of older women who are more vulnerable to old age poverty due to their longer longevity this paper uses data from a special module we devised on planning and financial literacy in the 2004 health and retirement study it shows that women display much lower levels of financial literacy than the older population as a whole in addition women who are less financially literate are also less likely to plan for retirement and be successful planners these findings have important implications for policy and for programs aimed at fostering financial security at older ages

why does the law of one price fail an experiment on index mutual funds we conduct an experiment to evaluate why individuals invest in high fee index funds in our experiments subjects allocate 10 000 across four s p 500 index funds and are rewarded for their portfolio s subsequent return subjects overwhelmingly fail to minimize fees we can reject the hypothesis that subjects buy high fee index funds because of bundled non portfolio services search costs for fees matter but even when we eliminate these costs fees are not minimized instead subjects place high weight on annualized returns since inception fees paid decrease with financial literacy interestingly subjects who choose high fee funds sense they are making a mistake

regional transformation through technological entrepreneurship abstract what does it take for a region to foster technological entrepreneurship recently there has been significant interest in this topic most writers on this topic emphasize the tangible infrastructure such as sound legal systems transparent capital markets advanced telecommunications and transportation systems etc sound legal systems capital markets and other structural features are necessary prerequisites for technopreneurship however what i am calling the intangibles of entrepreneurship are the sufficient conditions that allow specifically for schumpeterian entrepreneurship to thrive in a locality often governments attempt to promote technopreneurship by injecting risk capital they distribute these funds through small business development centers and several regions and countries have even attempted public venture capital funds however my hypothesis is that if only risk capital is injected it flows straight to low quality entrepreneurship focusing on only risk capital the investing government assumes that the risk capital itself will create all other prerequisites for growth this is a major supposition if risk capital is expected to produce extraordinary wealth it must be accompanied by seven other intangibles including access to novel ideas role models informal forums region specific opportunities safety nets access to large markets and executive leadership

organizational structure and performance feedback centralization aspirations and termination decisions this study examines the effects of organizational structure and performance feedback on termination decisions in particular product phaseout using quarterly product level data on the major mobile handset manufacturers for the period 2004 2009 we analyze how product level feedback affects product phaseout and how these decisions are conditioned by organizational structure the extent to which decision making is centralized we argue that such structure affects termination in two ways directly through coordination and indirectly by shaping the interpretation of performance feedback our baseline models indicate that as performance increases above aspirations the rate of phaseout decreases we find that as performance declines below aspirations the rate of phaseout decreases but then increases when the product falls below a certain sales threshold we also find evidence that centralization amplifies the feedback effect above aspirations but attenuates it below aspirations this study links two pillars of the carnegie school aspiration levels and hierarchy to explain the complexity of phaseout following perceived success or failure we thereby augment the growing scholarship on performance feedback by considering some important conditional effects imposed by a centralized structure our focus on centralization expands the scope of theory concerning organization design by linking structure and cognition to explain firm behavior especially termination decisions

entrepreneurship and the initial size of firms abstract it is clear that entrepreneurs and their firms can vary widely nevertheless most of the research to date on entrepreneurship has examined central tendencies with relatively little attention devoted to entrepreneurial diversity this study examines one of the most distinguishing characteristics of young firms initial size the focus is whether smaller start ups differ from larger ones in the backgrounds of the entrepreneurs their processes of starting or the subsequent patterns of development in this longitudinal study an initial sample of 1903 young firms was examined to determine differences in characteristics of the entrepreneurs and in their processes of starting one year later data were obtained from 742 of these firms permitting analysis of how initial firm size was related to subsequent difficulties encountered and changes made as well as to performance as expected along almost every dimension these starting larger firms had the backgrounds that would seem to be necessary for the assembly of substantial resources they tended to have more education more management experience and goals that were more managerial in nature they also were more likely to have partners women were associated more often with smaller ventures but for this sample there were no differences in the representation of minorities between the smaller and larger start ups those starting larger ventures tended to rely more upon external investors and to start ventures more closely linked to their previous jobs both groups of entrepreneurs sought information from a number of sources but those founding larger ventures utilized professional advisors more whereas those starting smaller ventures utilized informal sources in the year after the first questionnaire differences between the two groups were less marked than expected both groups of surviving firms reported low levels of serious problems with the smaller ventures somewhat surprisingly reporting serious problems less often there were not many differences in changes made except that smaller ventures were more likely to lose partners and larger ventures were more likely to add branches or locations both groups reported high rates of mean growth in sales the smaller ventures with their small initial bases showed larger percentage increases smaller ventures also showed higher percentage increases in employment and surprisingly a greater increase in the absolute number of employees somewhat more of the smaller ventures had discontinued both groups included many firms that grew substantially and others that scaled back demonstrating the fluidity and experimentation characteristic of young firms for entrepreneurs and their advisors for public policy makers and for researchers any progress in understanding entrepreneurial processes should in the long run enhance venture performance the patterns observed here indicate that firms of different initial size tend to be associated with particular entrepreneurial characteristics processes of formation and subsequent patterns of development this diversity should be recognized in the development of assistance programs and university courses as well as in the interpretation of previous research for public policy makers the growth of these firms both small and large indicates the potential of economic contributions from entrepreneur ship further the growth of the smaller start ups suggests that even those ventures that appear to have few resources and modest potential can in the aggregate contribute substantially to the economy

novice portfolio and serial founders are they different abstract there is growing interest in entrepreneurs who have been involved in more than one venture yet to date there has been relatively little theoretical development and systematic empirical examination of the topic in particular there has been little attention to the potential heterogeneity of habitual entrepreneurship this study aims to contribute to this emerging area in two ways first it outlines a conceptual typology of habitual entrepreneurs who have founded purchased or inherited businesses second the empirical part of the study focuses on owner managers providing an exploratory analysis of the characteristics and effects of independent business ownership by novice portfolio and serial founders novice founders are those that have no prior entrepreneurial experience as either a founder an inheritor or a purchaser of a business portfolio founders retain their original business and inherit establish and or purchase another business serial founders are those who sell their original business but at a later date inherit establish and or purchase another business the study derives propositions suggesting differences among the three types of founders at the individual founder level of analysis similarities as well as differences in the personal background work experiences reasons leading to the start up of businesses and personal attitudes to entrepreneurship of these three types of entrepreneurs are explored at the organizational level of analysis finance employment and performance differences among the businesses owned by the three types of entrepreneurs are presented the issues are examined using a sample of entrepreneurs who were the principal owner managers of independent businesses in great britain the sample included 389 novice founders 62 6 75 portfolio founders 12 1 and 157 serial founders 25 3 no statistically significant differences were found among the three groups of entrepreneurs with regard to the main industrial activity geographical location and the age of their businesses univariate and multivariate tests were used to examine potential differences between the groups the results of the study show significant differences between portfolio and serial founders with regard to their parental background work experience and their age when they started their first business differences were also found with respect to reasons leading to start up personal attitudes to entrepreneurship and sources of funds used during the launch period of the surveyed business these findings suggest that habitual entrepreneurs cannot be treated as a homogeneous group the analysis however failed to find any significant differences between the performance of the surveyed firms owned by habitual founders and novice founders and between the two types of habitual founders the findings of the study indicate for researchers that there is a need to carefully define the unit of analysis in any examination of entrepreneurs in particular there is a need to take note of the heterogeneity of types of entrepreneur and to consider the entrepreneur as the appropriate unit of analysis rather than simply the firm although this study focused on habitual founders of businesses the theoretical section of the study also identified other types of habitual entrepreneurs such as serial corporate entrepreneurs and serial management buy out and buy in cases these other types of habitual entrepreneurs would appear to warrant further analysis the findings of this study have a number of implications for practitioners especially venture capitalists the absence of significant performance differences between novice and habitual entrepreneurs which is consistent with the results from other studies emphasizes the need for venture capitalists screening potential investees not to rely solely on previous experience the study also has implications for policy makers especially with respect to decisions concerning the allocation of resources to assist nascent entrepreneurs novice entrepreneurs and habitual entrepreneurs the similarities in business performance among novice serial and portfolio entrepreneurs suggests that policy makers need to be careful in targeting scarce resources most notably targeting resources to encourage talented nascent entrepreneurs to become novice entrepreneurs may offer returns which are at least as good as targeting resources to more experienced entrepreneurs

innovative opportunity pursuit human capital and business ownership experience in an emerging region evidence from ghana this study explores whether an entrepreneur s ability to assemble and leverage human capital particularly specific human capital relating to prior business ownership experience is associated with seven types of product and work practices innovation in an emerging region namely ghana logistic regression estimation revealed that portfolio entrepreneurs were more likely than novice entrepreneurs to report innovation tried multinomial logistic regression analysis revealed that portfolio entrepreneurs were more likely than other entrepreneurs to report innovation tried and introduced if the goals of policy are to increase the quality of new business start ups and maximize investment returns there is a case to target assistance to portfolio entrepreneurs

investor sophistication and capital income inequality abstract capital income inequality is large and growing fast accounting for a significant portion of total income inequality we study its growth in a general equilibrium portfolio choice model with endogenous information acquisition and heterogeneity across household sophistication and asset riskiness the model implies capital income inequality that grows with aggregate information technology investors differentially adjust both the size and the composition of their portfolios as unsophisticated investors retrench from trading risky securities and shift their portfolios to safer assets technological progress also reduces aggregate returns and increases the volume of transactions features that are consistent with recent u s data

variable organizational risk preferences tests of the march shapira model march and shapira s 1987 1992 model of managers risk preferences allows for shifts in attention between survival and aspiration levels our study provides initial empirical tests of their model

are internal capital markets efficient using segment information from compustat we find that the investment by a segment of a diversified firm depends on the cash flow of the firm s other segments but significantly less than it depends on its own cash flow the investment by segments of highly diversified firms is less sensitive to their cash flow than the investment of comparable single segment firms the sensitivity of a segment s investment to the cash flow of other segments does not depend on whether its investment opportunities are better than those of the firm s other segments

estimating individual discount rates in denmark a field experiment we estimate individual discount rates with respect to time streams of money using controlled laboratory experiments these discount rates are elicited by means of field experiments involving real monetary rewards the experiments were carried out across denmark using a representative sample of 268 people between 19 and 75 years of age individual discount rates are estimated for various households differentiated by socio demographic characteristics such as income and age our conclusions are that discount rates are constant over the 12 month to 3 year horizons used in these experiments and that discount rates vary substantially with respect to several socio demographic variables hence we conclude that it would be reasonable to assume constant discount rates for specific household types but not the same rates across all households

restoring rational choice the challenge of consumer financial regulation abstract this lecture considers the case for consumer financial regulation in an environment where many households lack the knowledge to manage their financial affairs effectively the lecture argu

financial literacy externalities this paper uses unique administrative data and a quasi field experiment of exogenous allocation to apartments in sweden to estimate medium and longer run effects on financial behavior from exposure to financially literate neighbors it contributes evidence of causal impact of financial literacy and points to a social multiplier of effective programs to enhance it exposure promotes saving in private retirement accounts and stockholding especially when neighbors have economics or business education but only for educated or male headed households findings point to relevant knowledge transfer through social interactions rather than to labor market or other channels linked to local economic conditions

bringing individuals back in the effects of career experience on new firm founding because of methodological and theoretical obstacles research on organizational foundings has largely focused on societal and population level explanations this paper takes the view that understanding firm foundings also requires linking to individual level processes we suggest that careers are an important mechanism linking individual level processes to firm foundings the firm founding experience of potential founders impacts organizational foundings by influencing expectations of the liability of newness we test our explanation on the set of inventions patented by the massachusetts institute of technology over the period 1980 1996 by examining the effect of inventors career experiences on the likelihood that an invention will be commercialized through the founding of a new organization copyright 2003 oxford university press

testing a causal model of corporate risk taking and performance the determinants of organizational risk taking and its impact on economic performance are critical issues in strategic management using a model that included risk performance performance expecta

towards an attention based view of the firm the central argument is that firm behavior is the result of how firms channel and distribute the attention of their decision makers what decision makers do depends on what issues and answers they focus their attention on what issues and answers they focus on depends on the specific situation and on how the firm s rules resources and relationships distribute various issues answers and decision makers into specific communications and procedures the paper develops these theoretical principles into a model of firm behavior and presents its implications for explaining firm behavior and adaptation 1997 by john wiley sons ltd

business group affiliation and firm search behavior in india responsiveness and focus of attention this paper investigates the effects of organizational form on problemistic search we contrast how indian firms affiliated with business groups and unaffiliated firms evaluate performance and react by adjusting their internal technology search and external market search we propose that compared with unaffiliated firms business group affiliated bg affiliated firms are more externally oriented in setting aspiration levels and more likely to respond to low performance in the market domain we find support for an external orientation of bg affiliated firms and find that group affiliation determines the responsiveness to performance feedback in different search domains the findings suggest a need to add considerations of organizational form and governance to the theory of organizational search

twin picks disentangling the determinants of risk taking in household portfolios this paper investigates risk taking in the liquid portfolios held by a large panel of swedish twins we document that the portfolio share invested in risky assets is an increasing and concave function of financial wealth leading to different risk sensitivities across investors human capital which we estimate directly from individual labor income also affects risk taking positively while internal habit and expenditure commitments tend to reduce it our microfindings lend strong support to decreasing relative risk aversion and habit formation preferences furthermore heterogeneous risk sensitivities across investors help reconcile individual preferences with representative agent models

balancing search and stability interdependencies among elements of organizational design we examine how and why elements of organizational design depend on one another an agent based simulation allows us to model three design elements and two contextual variables that have rarely been analyzed jointly a vertical hierarchy that reviews proposals from subordinates an incentive system that rewards subordinates for departmental or firm wide performance the decomposition of an organization s many decisions into departments the underlying pattern of interactions among decisions and limits on the ability of managers to process information interdependencies arise among these features because of a basic general tension to be successful an organization must broadly search for good sets of decisions but it must also stabilize around good decisions once discovered an effective organization balances search and stability we identify sets of design elements that encourage broad search and others that promote stability the adoption of elements that encourage broad search typically raises the marginal benefit of other elements that provide offsetting stability hence the need to balance search and stability generates interdependencies among the design elements we pay special attention to interdependencies that involve the vertical hierarchy our findings confirm many aspects of conventional wisdom about vertical hierarchies but challenge or put boundary conditions on others we place limits for instance on the received wisdom that firm wide incentives and capable subordinates make top level oversight less valuable we also identify circumstances in which vertical hierarchies can lead to inferior long term performance

lifecycle consumption under different income profiles evidence and theory abstract we report on a series of economic decision making experiments exploring how individuals make lifecycle consumption and saving plans when they face different income profiles representing different pension replacement rates we aim to assess whether variations in pension replacement rates might aid or hinder individuals ability to make good lifecycle consumption and saving plans we find that pension replacement rates matter for subjects experimental payoffs and consumption behavior in particular our treatment with a 100 pension replacement rate yields the highest experimental payoff and more subjects in this treatment choose the status quo strategy of consuming endowments in every period we show that a model of rational inattention is useful for explaining subjects responses to different pension replacement rates

entrepreneurship and economic theory this article discusses economic theories of entrepreneurship drawing principally on work conducted in labour economics microeconomics macroeconomics and financial economics the article explains how incentives and constraints of various kinds affect occupational choices and entrepreneurial innovation as well as how entrepreneurial decisions affect macroeconomic performance implications for public policy are drawn

unbundling the structure of inertia resource versus routine rigidity i work to unbundle the structure of inertia into two distinct categories resource rigidity failure to change resource investment patterns and routine rigidity failure to change organizational p

the relation between return and income this paper presents evidence that the corporate stock owned by high income investors appreciates substantially faster than the stock owned by investors with lower incomes the evidence indicates that the differences are large and that they have persisted for a long period of time some potential explanations of this phenomenon are discussed and it seems that the best explanation is that the rich have a higher tendency to invest in risky stock

an examination of the substitutability of founders human and financial capital in emerging business ventures abstract undoubtedly access to financial capital and other resources is an important antecedent of new venture performance indeed inadequate financial resources often are cited as a primary reason why emerging businesses fail barren 1989 mcqueen 1989 otterbourg 1989 rujoub cook and hay 1995 yet there is some feeling among scholars that competent founders will find a way of coming up with necessary resources and capital chandler and hanks 1994 timmons 1990 thorne 1989 in this study we seek to better understand and provide insight into the factors that determine the amount of money needed to start a business and the factors that drive the decisions of whether such funding should come from founder savings or from outside sources we explore two questions 1 what factors are associated with the amount of initial capital raised and 2 what factors determine the mix of founder savings versus financial capital from outside sources that create the initial capital structure we seek to answer these questions using a sample of 102 manufacturing and service firms between 3 and 7 years of age these firms were categorized as manufacturing retail wholesale and business services in general the evidence supports our hypotheses the amount of financial capital at start up varies by industry of key importance in this study human and financial capital appear to be substitutable the analysis shows that on average firms with high levels of founder human capital and low levels of initial financial capital perform similarly to firms that have low levels of founder human capital and high levels of financial capital subgroup analysis provides insights into the degree of substitutability this finding suggests that founders with strong background experience may be able to start businesses that survive and thrive with less financial capital than their less experienced counterparts the proportion of initial capital provided by the founder differs significantly across industry types in more capital intensive industries founders provide a smaller proportion of the start up capital interestingly the amount of initial capital provided by the founder does not vary significantly across industry types this suggests that the amount of initial capital provided by the founder may result from contributing all they can give to the business which appears to be similar across business types finally founders perceptions of their ability to recognize and take advantage of opportunity are positively related to the proportion of initial capital provided by the founder this research provides insights into the factors that appear to drive the initial capital intensity and structure to provide better understanding of this phenomenon future research could investigate such practices as bootstrapping asset sharing or other techniques that allow founders to control resources without requiring ownership

economic development as self discovery in the presence of uncertainty about what a country can be good at producing there can be great social value to discovering costs of domestic activities because such discoveries can be easily imitated we develop a general equilibrium framework for a small open economy to clarify the analytical and normative issues we highlight two failures of the laissez faire outcome there is too little investment and entrepreneurship ex ante and too much production diversification ex post optimal policy consists of counteracting these distortions to encourage investments in the modern sector ex ante but to rationalize production ex post we provide some informal evidence on the building blocks of our model

perspectives from the president s commission on social security reform recently we were asked to serve on the president s commission to strengthen social security csss along with 14 other members drawn equally from both major political parties the commission s charge was to provide recommendations to modernize the social security system restore its fiscal soundness and develop a workable system of personal retirement accounts this paper explains how the commission arrived at some of its recommendations and the role that economics played in contributing to these recommendations we describe the key institutional constraints confronting efforts to reform social security and how these constraints influenced commission decisions we also illustrate how economics research influenced the commission s analysis of how to structure personal accounts ways to enhance traditional social security program finances and means of measuring the extent of financial progress achieved through reform

the effects of health wealth and wages on labour supply and retirement behaviour this paper estimates a life cycle model of labour supply retirement and savings behaviour in which future health status and wages are uncertain individuals face a fixed cost of work and cannot borrow against future labour pension or social security income the method of simulated moments is used to match the life cycle profiles of labour force participation hours worked and assets that are estimated from the data to those that are generated by the model the model establishes that the tax structure of the social security system and pensions are key determinants of the high observed job exit rates at ages 62 and 65 removing the tax wedge embedded in the social security earnings test for individuals aged 65 and older would delay job exit by almost one year by contrast social security benefit levels health and borrowing constraints are less important determinants of job exit at older ages for example reducing social security benefits by 20 would cause workers to delay exit from the labour force by only three months

novice serial and portfolio entrepreneur behaviour and contributions policy makers and practitioners are considering whether to allocate resources towards portfolio and serial entrepreneurs as well as the provision of additional initiatives to increase the pool of novice entrepreneurs to inform this policy debate univariate statistical tests were used to test for differences between 354 firms owned by novice serial and portfolio entrepreneurs in scotland also univariate tests were conducted to compare responses made by pairwise groups of entrepreneurs no significant differences were detected between the three types of entrepreneurs with regard to several entrepreneur and firm demographic characteristics additional analysis revealed that portfolio entrepreneurs have more diverse experiences and more resources than serial or novice entrepreneurs on average portfolio entrepreneurs appear to offer more attractive growth prospects than other entrepreneurs

after the exit acquisitions entrepreneurial recycling and regional economic development mason c m and harrison r t 2006 after the exit acquisitions entrepreneurial recycling and regional economic development regional studies 40 55 73 most studies of the impact of mergers and acquisitions suggest they have a detrimental impact on economic development in peripheral regions over the longer term however such assessments fail to consider the post acquisition behaviour of the cashed out entrepreneurs it is argued here that acquisition triggers a process of entrepreneurial recycling in which the entrepreneurs use their newly acquired wealth allied to the experience they have accumulated to engage in other entrepreneurial activities notably starting new business ventures and investing in other businesses as business angels or venture capitalists case studies of five scottish technology based firms that were acquired by non uk companies illustrate this process when entrepreneurial recycling is taken into account the overall impact of acquisition on regional economic development

initial human and financial capital as predictors of new venture performance abstract this research seeks to predict the performance of new ventures based on factors that can be observed at the time of start up indicators of initial human and financial capital are considered to determine how they bear upon the probability of three possible performance outcomes 1 failure 2 marginal survival or 3 high growth four categories of initial human and financial capital are examined general human capital represented here by the entrepreneur s education gender and race may reflect the extent to which the entrepreneur has had the opportunity to develop relevant skills and contacts management know how embodied in the entrepreneur or available through advisors or partners reflects management specific skills and knowledge without regard to the kind of business industry specific know how reflects specific experience in similar businesses financial capital is one of the most visible resources it can create a buffer against random shocks and allow the pursuit of more capital intensive strategies which are better protected from imitation the study utilizes a longitudinal study of 1053 new ventures representative of all industry sectors and geographical regions the research departs from most previous studies in considering different measures of performance marginal survival and growth and in considering explicitly whether the factors contributing to marginal survival differ from those contributing to high growth it was found that measures of general human capital influenced both survival and growth except for gender with women owned ventures being less likely to grow but just as likely to survive management know how variables had more limited impact having parents who had owned a business contributed to marginal survival but not to growth number of partners contributed to growth but not to survival management level prior employment in non profit organizations or not having been in the labor force and the use of professional advisors did not have significant effects industry specific know how contributed to both survival and growth amount of initial financial capital also contributed to both the usefulness of the model is enhanced by the fact that the resource variables considered are relatively easy to assess and all can be considered at the time of start up although some of the human capital variables cannot easily be changed the benefits or risks associated with each can be assessed in some cases potential problems can be identified so that plans can be modified to improve prospects overall it appears that using a model based upon the initial human and financial capital of the venture it is possible to predict the performance of new ventures with some degree of confidence

reporting guidelines for meta analysis in economics meta analysis has become the conventional approach to synthesizing the results of empirical economics research to further improve the transparency and replicability of the reported results and to raise the quality of meta analyses the meta analysis of economics research network has updated the reporting guidelines that were published by this journal in 2013 future meta analyses in economics will be expected to follow these updated guidelines or give valid reasons why a meta analysis should deviate from them

choice of pension management fees and effects on pension wealth abstract to shed light on the effects of individual choice on pension wealth we study a policy change to the management fees of pension funds implemented by peru s government in 2013 the reform established a new balance fee as a default option this fee is calculated as a percentage of the pension balance each individual had the initial option of keeping the previous management fee a load factor fee calculated as a percentage of the individual s salary we use administrative data to simulate pension balances based on the individual s choice of fee and the corresponding counterfactual our results indicate that the reform has been potentially adverse to 63 1 of individuals of whom 41 4 were assigned to the default option and 21 7 voluntarily chose the load fee these results reflect both the potentially negative unintended effects of the policy and an alarming lack of financial literacy among citizens we also detect heterogeneity in the intensity of the losses and gains due to the reform which caused greater losses than gains in particular younger and poorer individuals as well as those automatically assigned to the balance fee experienced higher losses moreover the new fee scheme is also associated with increasing inequality between individuals pension wealth

national culture and financial literacy international evidence we examine to what extent aspects of national culture can explain cross country variations in financial literacy our results for a sample of 92 countries show that hofstede s dimensions of pow

investment in financial literacy and saving decisions abstract we present an intertemporal consumption model of investment in financial literacy consumers benefit from such investment because financial literacy allows them to increase the returns on wealth since literacy depreciates over time and has a cost in terms of current consumption the model delivers an optimal investment in literacy furthermore literacy and wealth are determined jointly and are positively correlated over the life cycle the model drives our empirical approach to the analysis of the effect of financial literacy on wealth and saving and indicates that the stock of financial literacy early in life is a valid instrument in the regression of wealth on financial literacy using microeconomic and aggregate data we find strong support for the model s predictions

does financial education impact financial literacy and financial behavior and if so when in a meta analysis of 126 impact evaluation studies we find that financial education significantly impacts financial behavior and to an even larger extent financial literacy these results also hold for the subsample of randomized experiments rcts however intervention impacts are highly heterogeneous financial education is less effective for low income clients as well as in low and lower middle income economies specific behaviors such as the handling of debt are more difficult to influence and mandatory financial education tentatively appears to be less effective thus intervention success depends crucially on increasing education intensity and offering financial education at a teachable moment

the hyperbolic consumption model calibration simulation and empirical evaluation ur preferences for the long run tend to conflict with our short run behavior when planning for the long run we intend to meet our deadlines exercise regularly and eat healthfully but in the short run we have little interest in revising manuscripts jogging on the stairmaster and skipping the chocolate souffleala mode delay of gratification is a nice long term goal but instant gratification is disconcertingly tempting this gap between long run intentions and short run actions is apparent across a wide range of behaviors including saving choices a 1997 survey found that 76 percent of respondents believe they should be saving more for retirement looking only at respondents who believed they were at an age where you should be seriously saving already the survey found that 55 percent reported being behind in their savings and only 6 percent reported being ahead farkas and johnson 1997 the report on the survey concluded t he gaps between people s atti tudes intentions and behavior are troubling and threaten increased insecurity and dissatisfaction for people when they retire americans are simply not doing what logic and their own reasoning suggests they should be doing a 1993 luntz webber merrill lynch survey found similar answers when baby boomers were asked what percentage of your annual household income do you think you should save for retirement and what percentage of your annual

socioeconomic status and learning from financial information abstract the majority of lower socioeconomic status ses households in the u s and europe do not have stock investments which is detrimental to wealth accumulation here we examine one explanation for this puzzling fact namely that economic adversity may influence how people learn from financial information using experimental and survey data from the u s and romania we find that lower ses individuals form more pessimistic beliefs about the distribution of stock returns and are less likely to invest in stocks when these investments are likely to have good outcomes ses related differences in pessimism may help explain variation in investments across households

how financial literacy affects household wealth accumulation this study isolates the causal effects of financial literacy and schooling on wealth accumulation using a new household dataset and an instrumental variables iv approach financial literacy and schooling attainment are both strongly positively associated with wealth outcomes in linear regression models whereas the iv estimates reveal even more potent effects of financial literacy they also indicate that the schooling effect only becomes positive when interacted with financial literacy estimated impacts are substantial enough to imply that investments in financial literacy could have large wealth payoffs

firm survival in traded industries does localization moderate the effects of founding team experience prior studies of the impact of founder team industry and start up experience on firm survival have paid little attention to location decisions or cluster effects in this paper we focus on young firms doing business in industries that compete for customers in geographically dispersed markets traded industries we examine whether regional concentrations localization of related industrial firms moderate the effects of founder team industry and start up experience on firm survival the study draws on firm level data from the kauffman firm survey and on county business patterns data from the us census bureau we found that localization negatively moderates the positive effects of founder team prior industry experience on firm survival we did not find significant moderating effects of localization on founder team prior start up experience our findings highlight the importance of accounting for location decisions and cluster effects when evaluating the human capital inputs of founder teams

cognitive abilities and portfolio choice we study the relation between cognitive abilities and stockholding using the recent survey of health ageing and retirement in europe share which has detailed data on wealth and portfolio composition of individuals aged 50 in 11 european countries and three indicators of cognitive abilities mathematical verbal fluency and recall skills we find that the propensity to invest in stocks is strongly associated with cognitive abilities for both direct stock market participation and indirect participation through mutual funds and retirement accounts since the decision to invest in less information intensive assets such as bonds is less strongly related to cognitive abilities we conclude that the association between cognitive abilities and stockholding is driven by information constraints rather than by features of preferences or psychological traits

habitual entrepreneurs in the making how labour market rigidity and employment affects entrepreneurial re entry we investigate the impact of country level labour market regulations on the re entry decision of experienced entrepreneurs whereby they become habitual entrepreneurs multilevel logit models on entry decisions among 15 709 individuals in 29 european countries show that labour market regulations have a positive influence on the decision to re enter into entrepreneurship this positive impact is stronger among individuals holding wage jobs at the time of re entry compared to those that do not our results indicate that novice and habitual entrepreneurs may respond very differently to labour market rigidity we discuss and provide tentative explanations for these differences and outline potential policy implications

business ownership and attitudes towards risk we explore the relationship between business ownership and attitudes towards financial risk using individual level data drawn from the us survey of consumer finances scf the scf includes a measure of individuals attitudes towards risk allowing us to explore the implications of interpersonal differences in risk attitudes for the probability and success of business ownership our empirical findings suggest that willingness to take financial risk is positively associated with both the incidence and success of business ownership we find that this relationship is particularly pronounced in cases where the individual actually started the business

reconsidering the role of choice and chance for predicting retirement wealth abstract why do many households accumulate substantial wealth by retirement while many other households accumulate very little venti and wise 1999 2001 directly examine this question by utilizing data that were superior to that available to previous researchers and conclude that the bulk of the dispersion must be attributed to differences in the amount that households choose to save in this paper we examine the extent that a remaining problem in their data affected their results their measure of lifetime earnings that was used to capture a household s ability to save despite being based on administrative data was subject to topcoding in each year using a data set that was not subject to the same problem we find that the ability to save measured by lifetime earnings played a much larger role our findings suggest that the correlation between lifetime earnings and savings was about 50 percent greater than what is found when using censored data

switching costs and sectoral adjustments in general equilibrium with uninsured risk abstract consider a two sector economy subject to recurring technological shocks these affect earnings in the two sectors differently creating incentives for workers to switch occupation switching costs are sunk individuals are risk averse and cannot diversify their income risk we characterize the rational expectations equilibrium of the economy and illustrate the extent to which uncertainty and switching costs increase labor immobility the resulting equilibrium is not even second best optimal even a government that cannot transfer income to achieve insurance can improve matters by speeding up the reallocation of labor across sectors because that reduces relative price variability journal of economic literature classification numbers d52 d62 j62

humps and bumps in lifetime consumption in this article we argue that the life cycle model that allows demographics to affect household preferences and relaxes the assumption of certainty equivalence can generate hump shaped consumption profiles over age that are very similar to those observed in household level data sources and in particular match the differences in shape across different education groups liquidity constraints or myopia are not required to explain the empirical features of observed life cycle patterns

the entrepreneurial process and economic success in a constrained environment abstract the nature and impact of the entrepreneurial process on economic and business success is difficult to research as there are many intervening variables to consider it is also a complex ongoing evolutionary process which can only be fully understood in the context of the wider socioeconomic environment conventional cross sectional quantitative approaches can only provide limited insights and answers on the entrepreneurial process this paper explores the role of the entrepreneurial process in the economic and business success of sri lankan villagers the setting is especially favourable for the study of entrepreneurial processes as it approximates to a natural experiment in which many normal intervening variables are controlled for families with no previous assets were settled on two and a half acres of land in 1984 from equal beginnings the village had polarised 10 years later into a majority of economically unsuccessful villagers and a small but influential and successful entrepreneurial class an ethnographic and multiple embedded case study approach was adopted to explore their success the economically unsuccessful villagers had entered a cycle of impoverishment rapidly running into debt many losing control of their allocated paddy lands and having to become wage labourers to make a living the successful entrepreneurs in contrast had accessed a surprising range and combination of economic opportunities and had started multiple ventures an average of 3 7 each the findings reveal that entrepreneurial processes were important in the successful entrepreneurs emergence from an extremely unpromising and constrained environment in achieving success they were not much more innovative in identifying opportunities than the unsuccessful villagers rather they were much more creative and persistent in finding ways to mobilise scarce resources in particular their ability to extract value from their social networks and contacts was a vital element in their struggle to accumulate more capital the successful entrepreneurs were also adept at efficiently managing their enterprises a factor that became increasingly important as pluriactivity increased this supported the argument that both entrepreneurship and management are necessary for business success and that they are interdependent and complementary as most economic environments are significantly resource starved the paper provides insights for other researchers on how to approach the study of entrepreneurial processes in such environments

saving to overcome borrowing constraints implications for small business entry and exit this paper shows how a dynamic analysis of entrepreneurial choice in which inter temporal savings plans can be adjusted to build up capital allows agents to overcome borrowing constraints this casts fresh doubt on the notion that borrowing constraints deter entrepreneurial entry in the long run impatient agents are shown to voluntarily remain constrained indefinitely whereas patient agents become entrepreneurs the model also explains temporary and permanent closures of viable businesses the model s predictions are consistent with evidence of greater savings behaviour by entrepreneurs

adaptation as information restriction the hot stove effect individuals and social systems are often portrayed as risk averse and resistant to change such propensities are characteristically attributed to individual organizational and cultural traits such as risk aversion uncertainty avoidance discounting and an unwillingness to change this paper explores an alternative interpretation of such phenomena we show how the reproduction of successful actions inherent in adaptive processes such as learning and competitive selection and reproduction results in a bias against alternatives that initially may appear to be worse than they actually are in particular learning and selection are biased against both risky and novel alternatives because the biases are products of the tendency to reproduce success that is inherent in the sequential sampling of adaptation they are reduced whenever the reproduction of success is attenuated in particular when adaptation is slowed made imprecise or recalled less reliably the propensity to engage in risky and new activities is increased these protections against the error of rejecting potentially good alternatives on inadequate experiential evidence are costly however they increase the likelihood of persisting with alternatives that are poor in the long run as well as in the short run

mapping public support for innovation a comparison of policy alignment in the uk and france this paper proposes and tests a three dimensional model of public support design as a framework to compare public incentives for innovation in firms through time and across countries and consequently to compare forms of policy alignment of innovation objectives in an economy using data on 149 french and british policy programmes from the early 1980s to 2002 this paper shows that policy makers implement programmes within a different three dimensional design space in order to align several distinctive objectives and consequently strengthen the impact of governmental measures moreover as the objectives of the national players and policy makers evolved the portfolio of innovation policies also evolved in their separate ways nevertheless some similar trends are also observed

allocation of entrepreneurial attention abstract limited attention has been recognized by many economists as a scarce resource to be allocated among a given number of alternative uses however limited entrepreneurial attention is allocated between improving current operations and innovating new products which increases the number of current operations and perhaps the demands on the entrepreneur s attention the allocation of entrepreneurial attention thus endogenizes the number of uses to which attention can be allocated and the opportunity cost of attention this allocation has implications for the relationships between innovation firm size and monopoly profits between firm size and firm growth and the organization of the firm

risk balanced skills and entrepreneurship this paper proposes that risk aversion encourages individuals to invest in balanced skill profiles making them more likely to become entrepreneurs by not taking this possible linkage into account previous research has underestimated the impacts of both risk aversion and balanced skills on the likelihood individuals choose entrepreneurship data on dutch university graduates provide an illustration supporting our contention we raise the possibility that even risk averse people might be suited to entrepreneurship and it may also help explain why prior research has generated somewhat mixed evidence about the effects of risk aversion on selection into entrepreneurship

letting the market work for you an evolutionary perspective on product strategy managers must choose to allocate scarce resources either to the maintenance of a range of products tailored to heterogeneous consumer preferences or to the efficient production of a small number of products in addition managers must choose the degree to which they periodically cull the product line vigorous selection removes poor performers from the product line but this action simultaneously impairs the firm s ability to monitor changes in consumer preferences empirical evidence from the computer workstation industry reveals that the ideal choice of product variety depends on the competitive ecology of the industry product variety becomes less valuable as the total number of products on the market increases but it increases in value as uncertainty makes the accurate prediction of demand difficult copyright 2000 john wiley sons ltd

reassesing portfolio entrepreneurship portfolio entrepreneurship that is the simultaneous ownership of several businesses is becoming an important theme in the small business research literature to date however there have been few dedicated empirical investigations of the phenomenon this article analyses research on portfolio entrepreneurship that has been derived from a wide range of subject literatures including economic sociology cultural anthropology and agricultural economics the aim is to provide a deeper understanding of the motivations for portfolio entrepreneurship approaches and the processes associated with it

measuring the financial sophistication of households many households invest in ways that are hard to reconcile with standard financial theory and that have been labelled as investment mistakes campbell 2006 calvet campbell and sodini henceforth ccs 2007 there is increasing interest among household finance research ers in the concept of financial sophistication defined as the ability of a household to avoid making such mistakes a growing empirical lit erature documents a cross sectional correlation between household characteristics and invest ment mistakes richer better educated house holds tend to be better diversified marshall blume and irwin friend 1975 ccs 2007 william goetzmann and alok kumar 2008 annette vissing jorgensen 2003 display less inertia julie agnew pierluigi balduzzi and annika sunden 2003 yannis bilias dimitris georgarakos and michael haliassos 2008 campbell 2006 ccs 2009 vissing jorgensen 2002 and have a weaker disposition to hold losing and sell winning stocks ccs 2009 ravi dhar and ning zhu 2006 than other house holds one feature of these earlier papers is that mistakes are investigated one at a time often

escaping the prior knowledge corridor what shapes the number and variety of market opportunities identified before market entry of technology start ups the choice of the firm s market environment is one of the fundamental decisions of firm founders we study the pre entry generation of founders market choice sets by investigating their search for market opportunities in which the firm s technological resources as embodied in a product or service can be commercialized analyzing data collected through personal interviews with founders of 496 technology ventures we find that founding teams with more diverse industry experience and more diverse external knowledge sourcing relationships identify not only a larger number of but in particular more varied distant market opportunities however the extent to which strategic variety of such opportunities is identified depends on the founders technological expertise whereas technological expertise is less relevant in identification of the number of opportunities furthermore by showing that the extent and nature of the firm s pre entry opportunity set has a significant effect on the likelihood of subsequent firm diversification we document how initial constraints in founders choice sets can have a lasting impact on the growth potential that the new firm exploits over time we discuss the implications of our findings for the literatures on organizational learning and innovation entrepreneurship as well as the strategy literature examining firm growth diversification and value creation

the burden of the nondiversifiable risk of entrepreneurship entrepreneurship is risky we study the risk facing a well documented and important class of entrepreneurs those backed by venture capital using a dynamic program we calculate the certainty equivalent of the difference between the cash rewards that entrepreneurs actually received over the past 20 years and the cash that entrepreneurs would have received from a risk free salaried job the payoff to a venture backed entrepreneur comprises a below market salary and a share of the equity value of the company when it goes public or is acquired we find that the typical venture backed entrepre neur received an average of 5 8 million in exit cash almost three quarters of entrepreneurs receive nothing at exit and a few receive over a billion dollars because of the extreme dispersion of payoffs an entrepreneur with a coefficient of relative risk aversion of two places a certainty equivalent value only slightly greater than zero on the distribution of outcomes she faces at the time of her company s launch jel g24 g32 l26 m13

asymmetric information occupational choice and government policy a model of credit markets under asymmetric information is proposed in which individuals differ in abilities that are valued in both entrepreneurship and paid employment unlike the heterogeneous ability model of de meza and webb 1987 over investment is not inevitable under investment and credit rationing can occur instead this result depends on the novel possibility of there being greater separation of types in paid employment than in entrepreneurship the model allows individuals to be monitored in both occupations and permits derivation of the conditions under which the novel possibility holds the role of corrective government policies is also discussed

hierarchies and entrepreneurship we establish a correlation between the hierarchical structure of a firm and the likelihood of business creation among its former employees using a sample of 16 million observations of swedish workers and a novel proxy for hierarchies based on occupation data conditional on firm size and many other variables employees in firms with more layers are less likely to enter entrepreneurship to become self employed and to switch to another employer the effects of layers are much stronger for business creation than for job switching and they are stronger for entrepreneurship than for self employment we discuss two potential explanations for the distinctive hierarchy effect we find part of the effect could be to be due to preference sorting by employees and part due to employees in firms with fewer layers having a broader range of skills one test showing that the probability of entrepreneurship increases with their prior rank in an organization is consistent with ability sorting and inconsistent with preference sorting

mitigating procurement hazards in the context of innovation this paper extends the transaction cost economics framework to examine the contractual hazards that arise in the course of technological innovation we identify three main strategic hazards related to future technological opportunities that may develop in business transactions loss of technological pacing possibilities on the technological frontier loss of technological control at or behind the frontier and design omissions in examining these hazards we focus on the increasingly common phenomenon of vertically integrated firms supplying downstream competitors we then analyze how constellations of safeguards particularly relational safeguards can augment transaction specific safeguards in many instances to ensure high powered incentives are maintained we also consider under what conditions downstream divestiture is a desirable economizing option supportive illustrations are drawn from the desktop laser printer and telecommunications industries this abstract was borrowed from another version of this item

are americans saving optimally for retirement we solve each household s optimal saving decisions using a life cycle model that incorporates uncertain lifetimes uninsurable earnings and medical expenses progressive taxation government transfers and pension and social security benefits with optimal decision rules we compare household by household wealth predictions from the life cycle model using a nationally representative sample we find making use of household specific earnings histories that the model accounts for more than 80 percent of the 1992 cross sectional variation in wealth fewer than 20 percent of households have less wealth than their optimal targets and the wealth deficit of those who are undersaving is generally small

who become serial and portfolio entrepreneurs serial entrepreneurs run multiple businesses in sequence while portfolio entrepreneurs run multiple businesses in parallel they differ from novice entrepreneurs who have so far operated only one venture the present paper is the first to model occupational choices between all three entrepreneurial types it goes on to discuss its theoretical predictions in the light of independent evidence about serial and portfolio entrepreneurship from the extant literature

optimal financial knowledge and wealth inequality we show that financial knowledge is a key determinant of wealth inequality in a stochastic life cycle model with endogenous financial knowledge accumulation where financial knowledge enables individuals to better allocate lifetime resources in a world of uncertainty and imperfect insurance moreover because of how the us social insurance system works better educated individuals have most to gain from investing in financial knowledge our parsimonious specification generates substantial wealth inequality relative to a one asset saving model and one in which returns on wealth depend on portfolio composition alone we estimate that 30 40 percent of retirement wealth inequality is accounted for by financial knowledge

social capital economic growth and regional development iyer s kitson m and toh b 2005 social capital economic growth and regional development regional studies 39 1015 1040 this paper examines the relationships between social capital economic performance and regional development and it stresses the complexity and variability across space of such relationships in contrast to the conventional macroeconomic approach of using indicators of social capital in formal growth models what is required is a more nuanced analysis that evaluates the impact of social capital by region to support this argument the paper examines social capital data from the social capital community benchmark survey 2000 which provides social capital data for more than 24 000 individuals living in 40 communities grouped into nine regions in the usa these data show remarkable diversity of social capital by region multivariate analysis is used to examine the impact of economic and social determinants of social capital and shows that education is important for nearly all ind

differences between private firms owned by novice serial and portfolio entrepreneurs implications for policy makers and practitioners w esthead p u cbasaran d and w right m 2003 differences between private firms owned by novice serial and portfolio entrepreneurs implications for policy makers and practitioners reg studies 37 187 200 policy makers can target hard i e financial and soft i e technical assistance to firms some policy makers and practitioners are considering whether resources could be more effectively utilized if they were targeted towards habitual entrepreneurs rather than in the form of additional initiatives to increase the pool of pure nascent entrepreneurs and novice entrepreneurs to inform this policy debate similarities and differences between 354 firms owned by novice serial and portfolio entrepreneurs in scotland are highlighted with regard to the process of financing businesses organizational capabilities as well as the size and performance of the surveyed businesses presented empirical evidence confirms that portfolio entrepreneurs have more diverse experiences and more resources than

hybrid entrepreneurship and public policy the case of firm entry deregulation hybrid entrepreneurs are entrepreneurs who are simultaneously working as paid employees although they constitute a systematic and large part of new firm creation their possibly distinct responsiveness to public policy is not yet studied arguing for the need to consider hybrid entrepreneurs in public policy we analyze the introduction of one stop shops for faster and simplified firm registration in mexico we find that hybrid entrepreneurs are more responsive to changes in entry regulation than full time entrepreneurs while both the best and least educated people respond to the reform the effect is most pronounced for highly educated hybrid entrepreneurs

dependent self employment as a way to evade employment protection legislation this paper examines whether the strictness of employment protection legislation encourages employers to contract out work to their own paid employees by the formula of dependent self employment while making transitions to independent self employment less likely by altering the relative valuation of risk between salaried work and self employment in favour of the former in conducting this analysis discrete choice models are applied to data drawn from the european community household panel from 1994 to 2001 to test the hypotheses a tentative individual measure of the potential severance payment that a worker would receive in the case of dismissal is included as well as aggregated variables that try to capture differences in labour market institutions and macroeconomic conditions evidence for a positive impact of the strictness of employment protection legislation and the potential severance payment on transitions to dependent self employment is found the opposite effects however are detected for individuals becoming independent self employed

entrepreneurs optimism and new venture performance a social cognitive perspective previous research indicates that entrepreneurs are generally high in dispositional optimism the tendency to expect positive outcomes even when such expectations are not rationally justified findings of the current study demonstrate a negative relationship between entrepreneurs optimism and the performance revenue and employment growth of their new ventures past experience creating ventures and industry dynamism moderated these effects strengthening the negative relationship between entrepreneurs optimism and venture performance these findings illustrate the benefits of applying a social cognitive perspective toward efforts to understand key aspects of the new venture creation and development process

information and inequality abstract this paper studies wealth inequality in a blanchard yaari model with idiosyncratic investment returns its key innovation is to assume that individuals can buy information information reduces uncertainty about the unknown mean investment return reduced estimation risk encourages investment in higher yielding risky assets as a result endogenous information acquisition amplifies wealth inequality wealthy individuals buy more information which leads them to invest a higher share of their wealth in higher yielding assets which then makes them even wealthier the model s empirical implications are studied using monte carlo simulations and perturbation approximations an empirically plausible decrease in information costs can explain about two thirds of the observed increase in the top 1 wealth share

who is a passive saver under opt in and auto enrollment abstract defaults have been shown to have a powerful effect on retirement saving behavior yet there is limited research on who is most affected by defaults and whether this varies based on features of the choice environment using administrative data on employer sponsored retirement accounts linked to survey data we estimate the relationship between retirement saving choices and individual characteristics long term discounting present bias financial literacy and exponential growth bias under two distinct choice environments an opt in regime and an auto enrollment regime consistent with our conceptual model we find that the determinants of following the default and contribution behavior are regime specific under the opt in regime financial literacy plays an important role in predicting total contributions active saving choices and maxing out contributions in the tax preferred account in contrast under the auto enrollment regime present bias is the most significant behavioral predictor of contribution behavior a causal interpretation of the estimates suggests that auto enrollment increases saving primarily among those with low financial literacy

nobel lecture the economic way of looking at behavior an important step in extending the traditional theory of individual rational choice to analyze social issues beyond those usually considered by economists is to incorporate into the theory a much richer class of attitudes preferences and calculations while this approach to behavior builds on an expanded theory of individual choice it is not mainly concerned with individuals it uses theory at the micro level as a powerful tool to derive implications at the group or macro level the lecture describes the approach and illustrates it with examples drawn from my past and current work