Risk-Sharing and Entrepreneurship

Matilda Kilström and Paula Roth
Additional contact information
Matilda Kilström: Stockholm School of Economics

No 1424, Working Paper Series from Research Institute of Industrial Economics

Abstract: In this paper, we study the role of risk-sharing in entrepreneurship-driven innovation. Studying entrepreneurship and innovation entails modeling an occupational choice and an effort choice. Risk-sharing may increase the number of individuals who become entrepreneurs by limiting the downside risk. The effort of entrepreneurs may, however, be hampered by high risk-sharing if this limits the returns faced by successful entrepreneurs relative to unsuccessful entrepreneurs. We construct a simple theoretical model where risk-sharing may be either private or provided through the welfare state by means of taxation. We show that, in addition to the occupational and effort choice dimensions, the level of public risk-sharing also matters for the characteristics of entrepreneurs.

Keywords: Innovation; Institutions; Growth risk-sharing; Inequality; Incentives (search for similar items in EconPapers)
JEL-codes: D64 E02 O30 O33 O43 O47 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2022-02-16
New Economics Papers: this item is included in nep-ban, nep-cwa, nep-ent, nep-ino, nep-mac and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.ifn.se/wfiles/wp/wp1424.pdf Full text (application/pdf)

Related works:
Journal Article: Risk-sharing and entrepreneurship (2024)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1424

Access Statistics for this paper

More papers in Working Paper Series from Research Institute of Industrial Economics Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Elisabeth Gustafsson ().