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Abstract:

cover
SERC/Urban and Spatial Programme Discussion Paper
Homeownerhip and Entrepreneurship
Philippe Bracke, Christian Hilber and Olmo Silva
April 2012
Paper No' SERCDP0103:
Full Paper (pdf)

JEL Classification: L26; D14; G11; R21


Tags: entrepreneurship; homeownership; panel estimation

We study the link between homeownership and entrepreneurship by exploiting the longitudinal dimension of the British Household Panel Survey (BHPS) and constructing a detailed monthly-spell dataset that tracks individuals? job history and tenure choice, coupled with other time-varying characteristics. Our fixed-effects estimates show that purchasing a house reduces the likelihood of starting a business by 20-25%. This result is driven by homeowners with mortgages and persists for several years after entering homeownership. The negative link can be rationalized by portfolio considerations: leveraged housing investments crowd out entrepreneurial investments. Alternative explanations based on credit constraints find little support in our data.