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Papers written by Author(s): 'Astrid Marinoni'

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  • Working Paper

    Who Gains From Creative Destruction? Evidence From High-Quality Entrepreneurship in the United States

    October 2019

    Working Paper Number:

    CES-19-29R

    The question of who gains from high-quality entrepreneurship is crucial to understanding whether investments in innovative startup firms produce socially beneficial outcomes. Although entrepreneurship is widely viewed as a central driver of economic growth, recent research has raised concerns that it may also exacerbate inequality and other undesirable social outcomes. We bring new evidence to this debate by analyzing the impact of entrepreneurship on a variety of local economic outcomes, including income inequality, average incomes, and income mobility, using IRS and U.S. Census Bureau microdata. We find that entrepreneurship indeed increases income inequality, although this effect fades over time. While entrepreneurship produces statistically significant income gains across the distribution, the economic magnitude of these effects varies dramatically, with benefits concentrated among top earners. We also find that entrepreneurship serves as an important mobility tool for less well-off individuals, positively increasing their probability of rising to the top of the income distribution. These mobility effects are strong for Asian, Hispanic, and foreign-born individuals, but are less evident among Black individuals.
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  • Working Paper

    Who Gains from Creative Destruction? Evidence from High-Quality Entrepreneurship in the United States

    October 2019

    Working Paper Number:

    CES-19-29

    The question of who gains from high-quality entrepreneurship is crucial to understanding whether investments in incubating potentially innovative start-up firms will produce socially beneficial outcomes. We attempt to bring new evidence to this question by combining new aggregate measures of local area income inequality and income mobility with measures of entrepreneurship from Guzman and Stern (2017). Our new aggregate measures are generated by linking American Community Survey data with the universe of IRS 1040 tax returns. In both fixed effects and IV models using a Bartik-style instrument, we find that entrepreneurship increases income inequality. Further, we find that this increase in income inequality arises due to the fact that almost all of the individual gains associated with increased entrepreneurship accrue to the top 10 percent of the income distribution. While we find mixed evidence for small positive effects of entrepreneurship lower on the income distribution, we find little if any evidence that entrepreneurship increases income mobility.
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