How entrepreneurship is affected by inter generational mobility in US and globally

Abstract

The present dissertation aims at investigating an important issue related to economic and social growth, the effect of intergenerational mobility on entrepreneurship. In this paper, an effort to answer the following questions is made. The first one is to understand why inequality has relationship with entrepreneurship. The second question to be answered is why entrepreneurship is affected by mobility and inequality of opportunity. Inequality in a country means that the resources are not equally distributed and usually most of the population earn less than the average, and the rest of the population are wealth. Considering this, we could assume that this is a motivation for poor people to become rich. In the other hand we could think high income countries where inequality is not common and we can observe that those countries have more entrepreneurship activity, as a result we can understand that education possible is a factor that help entrepreneurship. As far as the second question, we could predict that if someone’s parents are entrepreneurs and all his life had social stimuli around business it would be easier for him to follow the same career. In addition, for someone that has no relationship with entrepreneurship and his family hasn’t have money to help him it would be more difficult to succeed in that field. According to existing literature, as inequality increase, wealth accumulation occurs, leading to more enterprise creation Ragoubi and El Harbi (2017). However, after reaching a certain inequality threshold, this relationship becomes negative (an inverted U-shaped relationship between entrepreneurship and income inequality appears) Kuznets (1995). The methodology used to answer the above-mentioned questions in the following. First, literature review is realized, so as to provide information on existing research on the topic. Insight on important terms is provided, as well as previous research results concerning mobility, inequality and entrepreneurship. Then, quantitative, secondary research is realized using data from two different sources. First, in order to provide information on the United States, data from Kaufman (early stage entrepreneurship data by state 1998-2019) for 51 states are used. Also, the international mobility measures from Chetty et al. (2014) are used in the analysis. Then, in order to provide answers for the global environment, data from Global Entrepreneurship Index for 92 countries are used. Research results are provided in the analysis and results chapter. Conclusions follow to summarize answers referring to the research questions and recommendations are made referring to entrepreneurship and its relationship with mobility and inequalities. for year 2019 and we use the intergenerational mobility measures from Chetty et al. (2014). In addition, we examine Global Data for 92 countries and use to measure entrepreneurship. For intergenerational mobility we use the dataset from World bank. (GDIM, 2018).