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

This paper investigates the career effects of mental health, focusing on depression, schizophrenia, and bipolar disorder (BD). Individual-level registry data from Denmark show that these disorders carry large earnings penalties, ranging from 34 percent for depression and 38 percent for BD to 74 percent for schizophrenia. To investigate the causal effects of mental health on a person’s career, we exploit the approval of lithium as a maintenance treatment for BD in 1976. Baseline estimates compare career outcomes for people with and without access in their 20s, the typical age of onset for BD. These estimates show that access to treatment eliminates one third of the earnings penalty associated with BD and greatly reduces the risks of low or no earnings. Importantly, access to treatment closes more than half of the disability risk associated with BD.

(Latest version: July 2021)

NBER Working Paper #w29031 – DOI/PDF

CEPR Discussion Paper #16401 – PDF

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