Household Wealth and Entrepreneurial Career Choices: Evidence from Climate Disasters
July 2024
Working Paper Number:
CES-24-39
Abstract
This study investigates how household wealth affects the human capital of startups, based on U.S. Census individual-level employment data, deed records, and geographic information system (GIS) data. Using floods as a wealth shock, a regression discontinuity analysis shows inundated residents are 7% less likely to work in startups relative to their neighbors outside the flood boundary, within a 0.1-mile-wide band. The effect is more pronounced for homeowners, consistent with the wealth effect. The career distortion leads to a significant long-run income loss, highlighting the importance of self-insurance for human capital allocation.
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endogeneity,
employ,
entrepreneurial,
entrepreneurship,
insurance,
wealth,
housing,
residential,
socioeconomic,
resident,
home,
insured,
unemployed,
residence,
renter,
homeowner,
disaster
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National Science Foundation,
New York University,
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Net Present Value,
National Institute on Aging,
Alfred P Sloan Foundation,
Longitudinal Employer Household Dynamics,
Census Bureau Disclosure Review Board,
Disclosure Review Board,
Person Validation System,
Person Identification Validation System,
Federal Statistical Research Data Center
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