Windfalls, Wealth, and the Transition to Self-Employment

Reference:

Georgellis, Y., Sessions, J. G. and Tsitsianis, N., 2005. Windfalls, Wealth, and the Transition to Self-Employment. Small Business Economics, 25 (5), pp. 407-28.

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Abstract

We examine the transition to, and survival in, self-employment among a sample of British workers. We find evidence of capital constrains, with wealthier individuals being more likely to transit ceteris paribus. Windfall gains raise the probability of transition at a decreasing rate--gains of more than L20000-22000 reduce the probability of transition--and larger gains reduce the probability of transition amongst relatively wealthier respondents. We also find peculiarities in the effects of particular types of windfall; redundancy payments and inheritances raise the probability of transition, whilst lottery wins reduce the probability of (especially male) transitions. In contrast, inheritances (lottery wins) hinder (augment) self-employment survival.

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