Forced Entrepreneurs

Isaac Hacamo and Kristoph Kleiner

73 Pages • Posted: 29 Jun 2016 • Last revised: 21 Oct 2021

Abstract - 🔗

Conventional wisdom suggests labor market distress drives workers into temporary self-employment, lowering entrepreneurial quality. Analyzing employment histories for 640,000 U.S. workers, we document graduating college during a period of high unemployment does increase entry to entrepreneurship. However, compared to voluntary entrepreneurs, firms founded by forced entrepreneurs are more likely to survive, innovate, and receive venture-backing. Explaining these results, we confirm labor shocks disproportionately impact high-earners and these same workers start more successful firms. Overall, we document untapped entrepreneurial potential across the top of the income distribution and demonstrate the role of recessions in reversing this missing entrepreneurship.

Comment - 🔗

It’s interesting that “venture backing” is considered as something normal, a success even. Being approved by your rich overlords. Workers have to pay huge tax, whereas corporations don’t. So workers are less able to amass capital and because of that they are forced to share their business with VC. If you were a rich VC owner, surely you would lobby politicians to ensure entrepreneurs are dependent on you. I think this is sickening. Corporate feudalism?