Entrepreneurship, frictions, and wealth
By: Marco Cagetti and Mariacristina De Nardi.
Contributors: De Nardi, Mariacristina.
Series: Federal Reserve Bank of Minneapolis, Research Department staff report ;; 322; Staff report (Federal Reserve Bank of Minneapolis. Research Dept. : Online) ;; 322.
Publisher: Federal Reserve Bank of Minneapolis
Published: 2003
Place of publication: [Minneapolis, Minn.]
Language: eng
Format: Electronic resource
Subjects: Entrepreneurship -- Econometric models.; Wealth -- Econometric models.; Saving and investment -- Econometric models.
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 the presence of borrowing constraints.  We construct a model that matches wealth inequality very well, for both entrepreneurs and non-entrepreneurs, and 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 Minneapolis web site.
Notes: Also available in print.
Includes bibliographical references.
Title from PDF file as viewed on 11/16/2004.
System requirements: Adobe Acrobat Reader.
Mode of access: World Wide Web.