« Insuring entrepreneurial downside risk« , Alexandre Gaillard (TSE), Sumudu Kankanamge (TSE).
This paper evaluates the effect of providing a specific entrepreneurial insurance in the spirit of a French program. We study the impacts on occupational mobilities and masses, the unemployment rate, and to a larger extent on production and capital accumulation. Using a two sectors quantitative general equilibrium model combining occupational choice, financial constraints and risky entrepreneurship, we study such reform in the US. We discipline our estimation strategy using monthly CPS and the SCF, and we provide contributions on the non-linear transitions between occupations with respect to earnings. Our results suggests that insurance increases the probability that unemployed individuals start a business by 7\% and the share of entrepreneurs by 2\%, while the impacts on unemployment rate, production and capital accumulation are small due to a lower labor force in the corporate sector. Finally, we compare effects of an insurance provision with an entry subsidy. In order to achieve the same share of entrepreneurs, insurance is 2 times less costly than a subsidy. Moreover, subsidy supports mainly poor entrepreneurs with low ability, while insurance does not.
« Why top incomes fluctuate so much ? », Alexandre Gaillard (TSE), Christophe Bruneel (TSE).
« Entrepreneurship and Wealth Distribution between France and the U.S », Alexandre Gaillard (TSE).