A tradition from Knight (1921) argues that more risk tolerant individuals are more likely to become entrepreneurs, but perform worse. We test these predictions with two risk tolerance proxies: stock market participation and personal leverage. Using investment data for 400,000 individuals, we...

Using a simple two-firm, two-period model, we analyze for a developing economy theprocess of ‘entrepreneurial entry,’ that is, entry by new firms into an industry that didnot previously exist in that country, focusing on the choice between formal andinformal status. Thus we explore issues...

We study the effect of taxation on entrepreneurship, taking into account both the amount of entry and the quality of new ventures. We show that even with risk neutral agents and no tax evasion progressive taxes can increase entrepreneurial entry, while reducing average firm quality. So called...