Entrepreneurship and Inequality

The social scientific evidence linking entrepreneurship, individuals’ lives, and economic inequality and prosperity remains limited at best. We know little about the jobs created by new firms and how the risk of firm failure affects the careers and life courses of individuals. Who are the beneficiaries of entrepreneurial activity? How are the careers and life courses of the individuals affected by entrepreneurship? This multi-paper project’s aim is to provide a rigorous set of analyses leading to a much deeper understanding of entrepreneurship and inequality focusing on these and other related questions.


Career Effects of Mental Health

with Barbara Biasi and Petra Moser

One in twelve Americans is affected by depression, bipolar disorder, schizophrenia, or another type of mental health disorder. This paper uses individual-level registry data and a change in the treatment of BD to investigate the career effects of mental health. Cross- sectional analyses show that mental health disorders carry immense earnings penalties. After a diagnosis, earnings drop by roughly one fifth for people with depression, one fourth for people with BD, and two fifths for people with schizophrenia. To identify the causal effects of mental health, we exploit the approval of lithium as a maintenance treatment for BD in 1976. Comparing earnings penalties for people with differential access, we find that access to treatment eliminates more than one third of the earnings penalty from BD. Disability is an important mechanism for lower earnings. Compared with their siblings, people with BD are 4.5 times more likely to receive disability; access to treatment eliminates more than half of this excess risk. We also find that parental wealth mitigates the career effects of mental health. Compared with the top quantile of parental wealth, people in the bottom quantile suffer substantially more severe adverse effects from mental health disorders, and they benefit three times as much from treatment.

PDF (Latest version: November 2020)

The Effect of High-Performer Migration and Entrepreneurship on Parent Firm Performance

with Pernille Gjerløv-Juel

We investigate the effect on parent firm performance from high-performer migration to same-industry start-ups. We propose two set of mechanism to explain this effect. 1) high-performer migration to same-industry start-ups enables competition by transferring human and complementary assets from the parent firm to a competitor and 2) it induces a loss of human assets. In support of the latter, we find that performance effects of same-industry start-ups are comparable to other types of high-performer migration including noncompetitive destinations. These findings demonstrate that competitive migration might not be more harmful than other types of high-performer migration.

PDF – R&R, under revision (Latest version: May 2019)

Entrepreneurial Couples

with Mirjam van Praag and Peter Thompson

We study motivations for and outcomes of couples starting up a joint firm, using a sample of 1,069 Danish couples that established a joint enterprise between 2001 and 2010, while comparing them to a set of comparable firms and couples. The main motivation for joint entrepreneurship is to create a labor market position for (female) spouses with limited alternative opportunities. This decision has positive effects: the financial benefits for each of the spouses, and especially the female, are larger in co-entrepreneurial firms, both during the life of the business and post-dissolution. This also reduces income inequality in the household.

Academy of Management Best Paper Proceedings 2015DOIPDF