Home-based Entrepreneurship

Abstract：  

Working at home benefits workers with low fixed costs and the ability to engage in joint market and household production. We evaluate a large-scale reform in Singapore that allows the possibility of business creation at one’s residential property and study whether the option of home-based entrepreneurship spurs entrepreneurial activities. Difference-in-difference estimate shows that the reform leads to a significantly higher level of business creation, implying that entry regulation with high fixed costs is an important factor that deters entrepreneurship. The effect is more pronounced for low-income individuals and industries with high starting capitals. Additional new firms in response to the reform have a higher survival rate, and the impact is also stronger for low-income individuals and industries with high starting capitals. These results suggest that financially constrained entrepreneurs benefit more from the reform. The reform also encourages entrepreneurs to become serial entrepreneurs, and they open a larger business with similar survival rate for their second firm. Overall, our findings suggest that the home office scheme effectively spurs entrepreneurial activities and attracts more entry into self-employment without significantly lowering the average quality of the pool.

Speaker Biography： 

Dr. Zhang joined The University of Hong Kong (HKU) as an assistant professor at the HKU Business School in 2020. Prior to that, he was an assistant professor of finance at Hong Kong Baptist University. His areas of interest include Household Finance, Behavioral Finance, Financial Institutions, and Corporate Finance. His research has been published in major economics and finance journals, including Journal of Financial Economics, Review of Economics and Statistics, Management Science, Journal of Financial and Quantitative Analysis, Review of Finance and Journal of Financial Intermediation.