Income inequality and entrepreneurship: lessons from the 2020 COVID-19 recession

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• dc.contributor.author Albert, Christoph, 1988-
• dc.contributor.author Caggese, Andrea
• dc.contributor.author González López-Valcárcel, Beatriz
• dc.contributor.author Martin-Sanchez, Victor
• dc.date.accessioned 2023-07-05T07:05:15Z
• dc.date.available 2023-07-05T07:05:15Z
• dc.date.issued 2023
• dc.description.abstract We study entry into entrepreneurship during the COVID-19 recession of 2020 using new data from an extensive survey of more than 24,000 Spanish households, conducted between June and November 2020. We find that while the overall decline in the startup rate in 2020 was large, and of a similar magnitude as that during the Great Recession, the differential impact depending on ex ante income was starkly different. During 2020, the drop in firm entry was entirely concentrated among low- and medium-income households. We show that the entrepreneurship gap between these households and their high-income counterparts is not directly explained by social distancing, since it is mostly driven by the sectors not directly affected by lockdown measures, and it is larger among households that did not suffer a negative income shock during the pandemic. Our results instead indicate that high-income households performed relatively better during the COVID-19 recession because they had the means to exploit new business opportunities, thanks to their larger wealth and better access to external finance.
• dc.description.sponsorship The views expressed in this paper are those of the authors and do not necessarily represent the views of Banco de España or the Eurosystem. Andrea Caggese acknowledges financing from the Plan Estatal de Investigación Científica y Técnica y de Innovación 2017–2020, project number PID2020-116268GB-I00, and from the Spanish Agencia Estatal de Investigación (AEI), through the Severo Ochoa Programme for Centres of Excellence in R&D (Barcelona School of Economics CEX2019-00915-S).
• dc.format.mimetype application/pdf
• dc.identifier.citation Albert C, Caggese A, González B, Martin-Sanchez V. Income inequality and entrepreneurship: lessons from the 2020 COVID-19 recession. J Bank Financ. 2023;149:106779. DOI: 10.1016/j.jbankfin.2023.106779
• dc.identifier.doi http://dx.doi.org/10.1016/j.jbankfin.2023.106779
• dc.identifier.issn 0378-4266
• dc.identifier.uri http://hdl.handle.net/10230/57470
• dc.language.iso eng
• dc.publisher Elsevier
• dc.relation.ispartof Journal of Banking & Finance. 2023;149:106779.
• dc.relation.projectID info:eu-repo/grantAgreement/ES/2PE/PID2020-116268GB-I00
• dc.relation.projectID info:eu-repo/grantAgreement/ES/2PE/CEX2019-00915-S
• dc.rights © 2023 The Author(s). Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/)
• dc.rights.accessRights info:eu-repo/semantics/openAccess
• dc.rights.uri http://creativecommons.org/licenses/by-nc-nd/4.0/
• dc.subject.keyword Recessions
• dc.subject.keyword Financial crisis
• dc.subject.keyword Entrepreneurship
• dc.subject.keyword Firm dynamics
• dc.subject.keyword Coronavirus
• dc.subject.keyword COVID-19
• dc.title Income inequality and entrepreneurship: lessons from the 2020 COVID-19 recession
• dc.type info:eu-repo/semantics/article
• dc.type.version info:eu-repo/semantics/publishedVersion