Risk-sharing and entrepreneurship

Arbeitspapier

In this paper, we study the role of risk-sharing in entrepreneurship-driven innovation. Studying entrepreneurship and innovation entails modeling an occupational choice and an effort choice. Risk-sharing may increase the number of individuals who become entrepreneurs by limiting the downside risk. The effort of entrepreneurs may, however, be hampered by high risk-sharing if this limits the returns faced by successful entrepreneurs relative to unsuccessful entrepreneurs. We construct a simple theoretical model where risk-sharing may be either private or provided through the welfare state by means of taxation. We show that, in addition to the occupational and effort choice dimensions, the level of public risk-sharing also matters for the characteristics of entrepreneurs.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IFN Working Paper ; No. 1424

Classification and Topics

• Classification: Wirtschaft ; Altruism; Philanthropy; Intergenerational Transfers ; Institutions and the Macroeconomy ; Innovation; Research and Development; Technological Change; Intellectual Property Rights: General ; Technological Change: Choices and Consequences; Diffusion Processes ; Institutions and Growth ; Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
• Subject: Innovation ; Institutions ; Growth risk-sharing ; Inequality ; Incentives

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kilström, Matilda ; Roth, Paula
• Event: Veröffentlichung
• (who): Research Institute of Industrial Economics (IFN)
• (where): Stockholm
• (when): 2022

Further information

• Handle: http://hdl.handle.net/10419/262038
• Last update: 10.03.2025, 11:42 AM CET