WORK IN PROGRESS
What Does It Take to Be a Business Owner? Evidence from Transitions from Job Loss
solo-authored [JOB MARKET PAPER] [WORKING PAPER] [PRESENTATION]
Abstract: The pathways leading to business ownership are varied, posing an empirical challenge in identifying the role of owners' skills. This paper focuses on a specific pathway: transitions to business ownership following job loss, leveraging mass layoff events for identification. I combine two comprehensive data sets from Brazil: the firm registry (which includes self-employed workers and small business owners) and matched employer-employee records. Comparing laid-off workers to a matched sample of non-laid-off workers, I find a four-fold increase in the quarterly business formation probability following job loss, a result driven by skilled individuals. In particular, managers are 5 percentage points more likely to start longer-lasting businesses (relative to an average of 60 percent), as they start ventures in industries where they worked before while also identifying industries with higher growth potential. To benchmark these results, I compare businesses started after job loss to those founded by workers who quit. While survival rates are similar, the skills driving survival are different: managerial experience is not associated with business survival among owners who quit. These findings highlight the importance of identifying post-job-loss business owners as a distinct group when evaluating the relationship between owners' skills and business outcomes. My results also suggest a path for more effective business support policies by both public and private actors, which should account for owners' career trajectories and skill sets.
Presentations and Conferences: American Economic Association Annual Meeting [San Francisco], Empirical Management Conference [Harvard], Applied Economics and Policy Seminar [Cornell], Labor Seminar [Cornell], Innovation, Entrepreneurship, and Technology Seminar [Cornell], Development Seminar [Cornell], Collaboration for International Development Economics Research Seminar [Cornell], European Association of Labor Economists Conference [Bergen], European Society of Population Economics Conference [Rotterdam], German Development Economics Conference [Hannover], Comparative Analysis of Enterprise Data Conference [Penn State], Emerging Markets Institute PhD Conference [Cornell], Development Micro Seminar [Cornell], Labor Work in Progress Seminar [Cornell], Latin American and Caribbean Economic Association Annual Meeting [Bogotá], The Work in Progress Seminar [Cornell], Applied Micro Seminar [Insper]
Media: AEA Interview