Entrepreneurship, saving and social mobility

By Vincenzo Quadrini. 2000

740 citations recorded by the source corpus.

This paper examines entrepreneurship in order to analyze, first, the degree to which the opportunity to start or own a business affects the household's saving behavior and the implication of this behavior for the distribution of wealth and, second, the relationship between the extent of entrepreneurship in the economy and socioeconomic mobility, that is, the movement of families across wealth classes over time. First, a number of stylized facts based on data from the Panel Study of Income Dynamics (PSID) and the Survey of Consumer Finances (SCF) are outlined. They show relevant differences in asset holdings and wealth mobility between entrepreneurs - economic agents that own a business - and workers. Second, a dynamic general equilibrium model of income and wealth distribution with an explicit entrepreneurial choice is developed. The model is calibrated to match the key features of the data, and it is then used to obtain an estimate of the quantitative importance for capital accumulation and wealth concentration of households that undertake entrepreneurial activities, via their different microeconomic behavior. Through the modeling of the entrepreneurial activities, the model economy developed in this study generates a stationary distribution of wealth with a degree of concentration that accounts for the inequality observed in the U. S. economy. The model also successfully replicates the main patterns of socioeconomic mobility in which entrepreneurs experience higher upward mobility than workers.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/82478e89be93e44816e49b6ddad07ccd1ce1d4d9

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Economics and Econometrics

Citations in the corpus

Uninsured Idiosyncratic Investment Risk (2005, neutral): “Some focus on the intensive margin as this paper (e.g., Bernanke and Gertler, 1989; Aghion and Bolton, 1997; Kiyotaki and Moore, 1997; Kocherlakota, 2000), others on the extensive (e.g., Banerjee and Newman, 1993; Quadrini, 2000; Cagetti and De Nardi, 2005; Buera, 2005).”
Macroeconomics and Household Heterogeneity (2016, background): “…wealth through accidental and intended bequests (as e.g. in De Nardi, 2004), the interaction between wealth accumulation and entrepreneurship (see Quadrini, 2000, Cagetti and De Nardi 2006 and Buera 2009) or idiosyncratic shocks to investment opportunities or its returns, as in Benhabib, Bisin…”
Entrepreneurship and structural economic transformation (2008, background): “Nelson and Pack (1999) use a dual economy model to explain the structural transformation of economies such as Korea and Taiwan from being characterized by a 8 Quadrini (2000) finds that entrepreneurs have much higher savings rates than workers.”
Consumption and risk sharing over the life cycle (2004, neutral): “Finally, a large literature — including Aiyagari (1994), Chatterjee (1994), Huggett (1996), Quadrini (2000), Krusell and Smith (1998) and Castañeda, Díaz-Giménez, and Ríos-Rull (1998) — focuses on wealth inequality using a class of models similar to ours.”
Aggregate Consequences of Limited Contract Enforceability (2004, neutral): “6 This property derives from the assumption of risk neutrality and is common to models with financial market frictions such as Cooley and Quadrini (2001) and Quadrini (2004).”
The Wealth Distribution with Durable Goods (2010, neutral): “Quadrini (2000) and Cagetti and Nardi (2005) study the interaction of uninsurable idiosyncratic labor risk and occupational choice, whereas Krusell and Smith (1998) and Carroll (2000) resort to changes in preferences to account for the observed level of wealth inequality.”
From Individual to Aggregate Labor Supply: A Quantitative Analysis Based on a Heterogeneous Agent Macroeconomy (2006, positive): “For the benchmark economy, the elasticity is 1.02 at the steady-state employment rate 15For studies on the wealth distribution in a dynamic general equilibrium environment, see Huggett (1996), Krusell and Smith (1998), or Quadrini (2000) among others.”