Full Citation
Title: Entrepreneurship and Occupational Choice in the Global Economy Keywords
Citation Type: Working Paper
Publication Year: 2013
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Abstract: This paper studies the effects of trade barriers on entrepreneurship. We first reveal a previously unknown fact: the higher the trade costs, the smaller the fraction of entrepreneurs. This fact holds across countries and across industries within the United States. To analyze this fact, we develop a model of international trade with occupational choice, borrowing elements from Lucas (1978) and Melitz (2003). The model delivers three new predictions, refining the relationship between entrepreneurship and trade costs: (i) domestic entrepreneurship increases with the trade costs of exporting from a foreign country to the home country, (ii) domestic entrepreneurship increases with the trade costs of exporting to the foreign country, and (iii) higher levels of entrepreneurship are associated with a lower fraction of exporting firms. We confirm these predictions using crosscountry , cross-industry, and individual-level data.
Url: http://www.bostonfed.org/economic/wp/index.htm.
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Authors: Díez, Federico J; Ozdagli, Ali K
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Publication Number: 11-5
Institution: Federal Reserve Bank of Boston
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Data Collections: IPUMS CPS
Topics: Labor Force and Occupational Structure, Other
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