Risk Aversion and Entrepreneurship: New Evidence Exploiting Exposure to Massive Earthquakes in Italy

Guido de Blasio, Maria De Paola (), Samuele Poy () and Vincenzo Scoppa

No 12057, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper investigates the impact of risk attitudes on the decision to become an entrepreneur. In contrast to previous research, we handle endogeneity issues relying on an instrumental variables strategy considering as a source of exogenous variation in risk aversion the early exposure to a massive earthquake. Using several waves of the Bank of Italy Survey of Household Income and Wealth (SHIW), we find that individuals experiencing an earthquake become significantly more risk averse. Second-stage estimates show that risk aversion has a significant negative impact on the probability of becoming an entrepreneur.

Keywords: entrepreneurship; risk attitudes; natural disasters; instrumental variables (search for similar items in EconPapers)
JEL-codes: C36 D81 D91 L26 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2018-12
New Economics Papers: this item is included in nep-cfn, nep-ent, nep-upt and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Small Business Economics, 2021, 57, 295-322

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https://docs.iza.org/dp12057.pdf (application/pdf)

Related works:
Working Paper: RISK AVERSION AND ENTREPRENEURSHIP: NEW EVIDENCE EXPLOITING EXPOSURE TO MASSIVE EARTHQUAKES IN ITALY (2019)
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