The latent entrepreneur's consumption-leisurepreference structure is studied utilizing Evans and Jovanovic's (1989) modelfor entrepreneurial activity under liquidity constraints. The theoretical modeldeveloped allows entrepreneurs to choose their level of leisure, while wageworkers cannot. It...

This paper extends Evans and Jovanovic’s (1989) (EJ) model to explicitly consider the latent entrepreneur’s consumption-leisure preference structure, and shows that an increase in his or her assets encourages entrepreneurial activity. This result indicates that EJ’s finding may hold...