Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship.
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ABSTRACT:
SUBMITTER: Babina T
PROVIDER: S-EPMC7446297 | biostudies-literature | 2020 Sep
REPOSITORIES: biostudies-literature
Publications
Destructive Creation at Work: How Financial Distress Spurs Entrepreneurship.
The review of financial studies 20191101 9
Using U.S. Census firm-worker data, I document that firms' financial distress has an economically important effect on employee departures to entrepreneurship. The impact is amplified in the high-tech and service sectors, where employees are key assets. In states with enforceable noncompete contracts, the effect is mitigated. Compared to typical entrepreneurs, distress-driven entrepreneurs are high-wage workers who found better firms, as measured by jobs, pay, and survival. Startup jobs compensat ...[more]
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