Difference between revisions of "Evans Jovanovic (1989) - An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints"

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{{Article
 
{{Article
 
|Has page=Evans Jovanovic (1989) - An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints
 
|Has page=Evans Jovanovic (1989) - An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints
|Has title=An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints
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|Has article title=An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints
 
|Has author=Evans Jovanovic
 
|Has author=Evans Jovanovic
 
|Has year=1989
 
|Has year=1989

Latest revision as of 19:14, 29 September 2020

Article
Has bibtex key
Has article title An Estimated Model Of Entrepreneurial Choice Under Liquidity Constraints
Has author Evans Jovanovic
Has year 1989
In journal
In volume
In number
Has pages
Has publisher
© edegan.com, 2016

Reference(s)

  • Evans, David and Boyan Jovanovic (1989), "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints", Journal of Political Economy, 97, pp. 808-827. pdf

Abstract

Is the capitalist function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.