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Forced Entrepreneurs

Journal of Finance, Forthcoming

73 Pages Posted: 29 Jun 2016 Last revised: 11 May 2021

See all articles by Isaac Hacamo

Isaac Hacamo

Indiana University - Kelley School of Business - Department of
Finance

Kristoph Kleiner

Indiana University - Kelley School of Business - Department of
Finance

Date Written: April 29, 2021

Abstract

Conventional wisdom suggests labor market distress drives workers
into temporary self-employment, lowering entrepreneurial quality.
Analyzing employment histories for 640,000 U.S. workers, we document
graduating college during a period of high unemployment does increase
entry to entrepreneurship. However, compared to voluntary
entrepreneurs, firms founded by forced entrepreneurs are more likely
to survive, innovate, and receive venture-backing. Explaining these
results, we confirm labor shocks disproportionately impact
high-earners and these same workers start more successful firms.
Overall, we document untapped entrepreneurial potential across the
top of the income distribution and demonstrate the role of recessions
in reversing this missing entrepreneurship.

Keywords: Entrepreneurship, labor markets, recessions, innovation,
venture capital

JEL Classification: L26, L25, M13, J23, E32, O31, G02

Suggested Citation: Suggested Citation

Hacamo, Isaac and Kleiner, Kristoph, Forced Entrepreneurs (April 29,
2021). Journal of Finance, Forthcoming, Available at SSRN: https://
ssrn.com/abstract=2801637 or http://dx.doi.org/10.2139/ssrn.2801637
 

Isaac Hacamo

Indiana University - Kelley School of Business - Department of
Finance

Indiana University - Kelley School of Business - Department of
Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States
812-855-7842 (Phone)

HOME PAGE: http://hacamo.weebly.com/

Kristoph Kleiner (Contact Author)

Indiana University - Kelley School of Business - Department of
Finance

Indiana University - Kelley School of Business - Department of
Finance ( email )

1309 E. 10th St.
Bloomington, IN 47405
United States

HOME PAGE: http://sites.google.com/site/kristophkleiner

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