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Journal Article
Puzzlingly Divergent Trends in Household Wealth and Business Formation
The rate of new business formation has declined sharply in recent decades, raising concerns among economists about job and productivity growth. This observed decline in business formation is likely to be juxtaposed to changes in characteristics such as household wealth that affect households’ propensity to become entrepreneurs. Economic theories of business formation suggest that wealthier households are more likely to start a business because wealth allows them to more easily reach a profitable scale.Justin Barnette and Andrew Glover use data from the Panel Study of Income Dynamics from ...