British Study on Inheritance and Entrepreneurship (Blanchflower & Oswald, 1998)
A 1998 study in Britain by David G. Blanchflower and Andrew J. Oswald, published in the Journal of Labor Economics under the title 'What Makes an Entrepreneur?', found that when young people received an inheritance of about £5,000, their likelihood of starting a business doubled. This suggests that a lack of capital was a significant barrier to entrepreneurship for them, indicating they were credit-constrained.
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Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Ch.9 Lenders and borrowers and differences in wealth - The Economy 2.0 Microeconomics @ CORE Econ
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British Study on Inheritance and Entrepreneurship (Blanchflower & Oswald, 1998)
Study on Inheritance and Transitions to Self-Employment (Holtz-Eakin, Joulfaian, & Rosen, 1994)
An economist observes that individuals who receive a sudden, unexpected financial windfall are significantly more likely to start their own business within the following year compared to a demographically similar group of individuals who did not receive such a windfall. What is the most robust economic conclusion that can be drawn from this observation?
Evaluating a Research Design for Financial Constraints
Critiquing the Inheritance-as-Experiment Model
The Logic of Using Inheritance as a Research Tool
The primary reason that receiving an unexpected inheritance is a useful natural experiment for studying credit constraints is that the amount of the inheritance is typically large enough to fund a new business.
Match each component of a study using inheritance to understand financial constraints with its corresponding role or interpretation in the research design.
When economists use the receipt of an unexpected inheritance as a natural experiment, they are typically investigating the impact of __________ on individual economic behavior, such as entrepreneurship.
Analyzing a Flawed Research Design
Interpreting Scenarios of Financial Windfalls
A researcher is using the receipt of an unexpected inheritance as a natural experiment to test the hypothesis that some potential entrepreneurs are credit-constrained. Arrange the following statements into the correct logical sequence that outlines the research process and its conclusion.
Learn After
A 1998 study found that when young people received a relatively small, unexpected inheritance, their probability of starting a business doubled. What is the most robust economic conclusion that can be drawn from this specific finding?
Interpreting Evidence on Entrepreneurship
The 1998 British study on inheritance and entrepreneurship concluded that the receipt of a small inheritance primarily spurred new business creation by providing individuals with novel business ideas they previously lacked.
Evaluating an Entrepreneurship Program
Interpreting an Economic Finding
A landmark 1998 study examined the relationship between receiving an inheritance and starting a business. Match each component of the study and its interpretation to the most accurate description.
A 1998 study in Britain observed that a small inheritance significantly increased the likelihood of a young person starting a business. This finding is often cited as strong evidence that these individuals were previously ______-constrained, meaning a lack of access to funding was a primary obstacle to their entrepreneurial ambitions.
A 1998 study explored the link between receiving an inheritance and starting a business. Arrange the following statements into the correct logical sequence that reflects the study's core argument, from initial observation to final conclusion.
Critiquing Economic Evidence on Entrepreneurship
Evaluating Causal Claims in Entrepreneurship Research