Critiquing the Inheritance-as-Experiment Model
Economists often use an unexpected inheritance as a 'natural experiment' to argue that a lack of access to capital (a credit constraint) is a primary barrier preventing people from starting businesses. Propose and explain one significant alternative explanation for why receiving an inheritance might increase the likelihood of someone starting a business. Your explanation should challenge the conclusion that a credit constraint was the only significant factor.
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Science
Economy
CORE Econ
Social Science
Empirical Science
Economics
Introduction to Microeconomics Course
The Economy 2.0 Microeconomics @ CORE Econ
Related
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.