Entrepreneurship, frictions, and wealth
By: Marco Cagetti, Mariacristina De Nardi
Contributors: De Nardi, Mariacristina; Federal Reserve Bank of Chicago. Research Department
Series: Working paper series -- WP-2005-09; Working paper series (Federal Reserve Bank of Chicago. Research Department : Online) -- WP-2005-09.
Publisher: Federal Reserve Bank of Chicago
Published: 2005
Place of publication: Chicago, Ill.]
Language: eng
Format: [electronic resource] /
Subjects: Entrepreneurship; Econometric models; Wealth; Saving and investment
Description: "Although the role of financial constraints on entrepreneurial choices has received considerable attention, the effects of these constraints on aggregate capital accumulation and wealth inequality are less known.  Entrepreneurship is an important determinant of capital accumulation and wealth concentration and, conversely, the distribution of wealth affects entrepreneurial choices in presence of borrowing constraints.  We construct a model that matches wealth inequality very well, for both entrepreneurs and non- entrepreneurs.  We find that more restrictive borrowing constraints generate less wealth concentration, but also reduce average firm size, aggregate capital, and the fraction of entrepreneurs.  We also find that voluntary bequests are an important channel that allows some high-ability workers to establish or enlarge an entrepreneurial activity: with accidental bequests only, there would be fewer large firms, fewer entrepreneurs, and less aggregate capital, but also less wealth concentration"--Federal Reserve Bank of Chicago web site.
Notes: Title from PDF file as viewed on 10/2/2006.

Includes bibliographical references.

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Mode of access: World Wide Web.