Review of Financial Studies Vol. 35 No. 9 2022

Does Career Risk Deter Potential Entrepreneurs?

Joshua D. Gottlieb¹; Richard R. Townsend²; Ting Xu³

¹ University of Chicago and NBER · ² University of California San Diego and NBER · ³ University of Virginia

Abstract

Do potential entrepreneurs remain in wage employment because of concerns that they will face worse job opportunities should their entrepreneurial ventures fail? Using a Canadian reform that extends job-protected leave to one year for women giving birth after a cutoff date, we study whether the option to return to a previous job increases entrepreneurship. A regression discontinuity design reveals that a longer job-protected leave increases entrepreneurship by 1.9 percentage points. These entrepreneurs start incorporated businesses that hire employees, in industries in which experimentation before entry has low costs and high benefits.

DOI

10.1093/rfs/hhab105

Volume

35

Issue

9

Pages

3973-4015

Language

en

Sources

openalex bibtex:phds-export.bib crossref

Cite

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