J. Anthony Cookson
University of Colorado
995 Regent Dr.
Boulder CO 80309
Institutional Affiliation: University of Colorado
NBER Working Papers and Publications
|June 2020||Personal Wealth and Self-Employment|
with , , : w27452
We examine how wealth windfalls affect self-employment decisions using data on cash payments from claims on Texas shale drilling to people throughout the United States. Individuals who receive large wealth shocks (greater than $50,000) have 51% higher self-employment rates. The increase in self-employment rates is driven by individuals who lengthen existing self-employment spells, and not by individuals who leave regular employment for self-employment. Moreover, the effect of wealth reverts for individuals whose payments run out. Rather than alleviating a financial constraint, our evidence suggests that unrestricted cash windfalls affect self-employment decisions primarily through self-employment’s non-pecuniary benefits.