In this paper, we formalize the view that economic development requires high rates of productive entrepreneurship, and this requires an efficient matching between entrepreneurial talent and production technologies. We first explore the role of financial development in promoting such efficient...

We explore which financial constraints matter the most in the choice of becoming an entrepreneur. We consider a randomly assigned welfare program in rural Mexico and show that cash transfers signi cantly increase entry into entrepreneurship. We then exploit the cross-household variation in the...

This paper shows that utility differences between the self-employed and employees increase with financial development. This effect is not explained by increased profits but by an increased value of non- monetary benefits, in particular job independence. We interpret these findings by building a...