Author
David S. Evans
Bio: David S. Evans is an academic researcher. The author has contributed to research in topics: Liquidity crisis & Market liquidity. The author has an hindex of 1, co-authored 1 publications receiving 3100 citations.
Papers
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TL;DR: The authors show that the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal, and a would-be entrepreneur must bear most of the risk inherent in his venture.
Abstract: Is the capital function distinct from the entrepreneurial function in modern economies? Or does a person have to be wealthy before he or she can start a business? Knight and Schumpeter held different views on the answer to this question. Our empirical findings side with Knight: Liquidity constraints bind, and a would-be entrepreneur must bear most of the risk inherent in his venture. The reasoning is roughly this: The data show that wealthier people are more inclined to become entrepreneurs. In principle, this could be so because the wealthy tend to make better entrepreneurs, but the data reject this explanation. Instead, the data point to liquidity constraints: capital is essential for starting a business, and liquidity constraints tend to exclude those with insufficient funds at their disposal.
3,241 citations
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TL;DR: In this article, the authors argue that opportunity discovery is a function of the distribution of information in society, and they show that entrepreneurs discover opportunities related to the information that they already possess.
Abstract: Before technological change leads to new processes, products, markets, or ways of organizing, entrepreneurs must discover opportunities in which to exploit the new technology. To date, research has not explained adequately why entrepreneurs discover these opportunities, which creates several conceptual problems in the entrepreneurship literature. Drawing on Austrian economics, I argue that opportunity discovery is a function of the distribution of information in society (Hayek 1945). Through in-depth case studies of eight sets of entrepreneurs who exploit a single MIT invention, I show that entrepreneurs discover opportunities related to the information that they already possess. I use these findings to draw several implications that differ from those prevailing in the entrepreneurship literature, including: (1) entrepreneurs do not always select between alternative market opportunities for new technologies; (2) the source of entrepreneurship lies in differences in information about opportunities; (3) the results of prior studies of entrepreneurial exploitation may suffer from bias; and (4) individual differences influence the opportunities that people discover, how their entrepreneurial efforts are organized, and how the government can influence this process.
4,281 citations
TL;DR: This article analyzed the response of small versus large manufacturing firms to monetary policy and found that small firms account for a significantly disproportionate share of the manufacturing decline that follows tightening of monetary policy, while large firms initially borrow to accumulate inventories and after a brief period, small firms quickly shed inventories.
Abstract: We analyze the response of small versus large manufacturing firms to monetary policy. The goal is to obtain evidence on the importance of financial propagation mechanisms for aggregate activity. We find that small firms account for a significantly disproportionate share of the manufacturing decline that follows tightening of monetary policy. They play a surprisingly prominent role in the slowdown of inventory demand. Large firms initially borrow to accumulate inventories. After a brief period, small firms quickly shed inventories. We attempt to sort financial from nonfinancial explanations with evidence on asymmetries and on balance sheet effects on inventory demand across size classes.
2,426 citations
2,234 citations
TL;DR: In this paper, the authors used various micro data sets to study entrepreneurship and found that the probability of self-employment depends positively upon whether the individual ever received an inheritance or gift, and that the self-employed report higher levels of job and life satisfaction than employees.
Abstract: This article uses various micro data sets to study entrepreneurship. Consistent with the existence of capital constraints on potential entrepreneurs, the estimates imply that the probability of self‐employment depends positively upon whether the individual ever received an inheritance or gift. When directly questioned in interview surveys, potential entrepreneurs say that raising capital is their principal problem. Consistent with our theoretical model's predictions, the self‐employed report higher levels of job and life satisfaction than employees. Childhood psychological test scores, however, are not strongly correlated with later self‐employment.
2,218 citations
TL;DR: In this article, the authors examined the process of selection into self-employment over the life cycle and the determinants of self employment earnings using data from the National Longitudinal Survey of Young Men (NLS) for 1966-1981 and the Current Population Surveys for 1968-1987.
Abstract: About 4.2 million men and women operate businesses on a full-time basis. Comprising more than a tenth of all workers, they run most of our nation’s firms and employ about a tenth of all wage workers. The fraction of the labor force that is self-employed has increased since the mid-1970s after a long period of decline.1 This paper examines the process of selection into self-employment over the life cycle and the determinants of self-employment earnings using data from the National Longitudinal Survey of Young Men (NLS) for 1966–1981 and the Current Population Surveys for 1968–1987.
2,188 citations