House Prices, Home Equity and Entrepreneurship: Evidence from U.S. Census Micro Data

During 1992-2007, house price growth is strongly correlated with local entrepreneurship. We show with Census Bureau data that most of this entry is related to construction and real estate; these entrants tend to be small and short-lived. Using a 1998 Texas reform that allowed home equity lending for the (cid:133)rst time in the state, we isolate that entrepreneurship through the collateral channel tends to be longer-lived and more balanced across sectors. The collateral channel is a tenth or less of the entry associated with house price increases, driven by a small share of homeowners who are constrained without price growth. those related to real estate. On the other hand, entrepreneurs entering due to unlocked collateral are longer-lived and more balanced across sectors. These results align with home equity loan data from the SBO. We conclude that unlocked home equity due to house price increases can be very important for a small share of constrained potential entrepreneurs, and result in meaningful businesses being started, but that this channel is a small share of the total entry linked to house price run-ups.

• Publication year

  2022

• Venue

  Journal of Monetary Economics

• Publication date

  2022-06-01

• Fields of study

  Not labeled

• Identifiers
  DOI 10.1016/j.jmoneco.2022.06.002
• External record

  Open on Semantic Scholar

• Source metadata

  Semantic Scholar

• No claims are published for this paper.

• No concepts are published for this paper.

• Founding Teams and Startup Performance

  2021cited by this paper
• Business Income Dynamics and Labor Market Fluidity

  2021cited by this paper
• Home Values and Firm Behavior

  2020cited by this paper
• Home Equity Lending, Credit Constraints and Small Business in the US

  2020cited by this paper
• Does Collateral Value Affect Asset Prices? Evidence from a Natural Experiment in Texas

  2020cited by this paper
• Do Credit Market Shocks Affect the Real Economy? Quasi-experimental Evidence from the Great Recession and “Normal” Economic Times

  2020cited by this paper
• House Prices and Consumption: A New Instrumental Variables Approach

  2020cited by this paper
• The State of American Entrepreneurship: New Estimates of the Quantity and Quality of Entrepreneurship for 32 US States, 1988–2014

  2020cited by this paper
• Dynamism Diminished: The Role of Housing Markets and Credit Conditions

  2019cited by this paper
• Demographic Origins of the Startup Deficit

  2019cited by this paper
• Moving to opportunity? The geography of the foreclosure crisis and the importance of location

  2019cited by this paper
• Are Credit Markets Still Local? Evidence from Bank Branch Closings

  2019cited by this paper
• Regional Heterogeneity and Monetary Policy

  2019cited by this paper
• House Prices, Local Demand, and Retail Prices

  2019cited by this paper
• Mortgage Debt and Entrepreneurship

  2018cited by this paper
• Housing Wealth Effects: The Long View

  2018cited by this paper
• Debtor Rights, Credit Supply, and Innovation

  2017cited by this paper
• Older and slower: The startup deficit’s lasting effects on aggregate productivity growth

  2017cited by this paper
• The Macroeconomic Effects of Housing Wealth, Housing Finance, and Limited Risk Sharing in General Equilibrium

  2017cited by this paper
• Homeownership, housing capital gains and self-employment

  2017cited by this paper
• Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?

  2017cited by this paper
• Self-Employment Dynamics and the Returns to Entrepreneurship

  2017cited by this paper
• Supply Constraints Are Not Valid Instrumental Variables for Home Prices Because They Are Correlated with Many Demand Factors

  2016cited by this paper
• Loan Originations and Defaults in the Mortgage Crisis: The Role of the Middle Class

  2016cited by this paper
• Experimentation and the Returns to Entrepreneurship

  2016cited by this paper
• SERIES HOUSING BOOMS AND BUSTS , LABOR MARKET OPPORTUNITIES , AND COLLEGE ATTENDANCE

  2015cited by this paper
• Does financing spur small business productivity? Evidence from a natural experiment

  2015cited by this paper
• HOUSING BOOMS AND BUSTS , LABOR MARKET OPPORTUNITIES , AND COLLEGE ATTENDANCE *

  2015cited by this paper
• House Prices and Consumer Spending

  2015cited by this paper
• Entrepreneurship and Urban Growth: An Empirical Assessment with Historical Mines

  2015cited by this paper
• Founder or Joiner? The Role of Preferences and Context in Shaping Different Entrepreneurial Interests

  2015cited by this paper
• Home Equity, Mobility, and Macroeconomic Fluctuations

  2015cited by this paper
• Trade Credit and Industry Dynamics: Evidence from Trucking Firms: Trade Credit and Industry Dynamics

  2015cited by this paper
• House Prices, Home Equity Borrowing, and Entrepreneurship

  2015cited by this paper
• Foreclosures, House Prices, and the Real Economy

  2014cited by this paper
• What Explains the 2007-2009 Drop in Employment?: The 2007-2009 Drop in Employment

  2014cited by this paper
• Houses as ATMs? Mortgage Renancing and Macroeconomic Uncertainty

  2014cited by this paper
• Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics

  2014cited by this paper
• Federal Reserve Bank of New York Staff Reports Grown-Up Business Cycles

  2014cited by this paper
• Housing Collateral, Credit Constraints and Entrepreneurship - Evidence from a Mortgage Reform

  2014cited by this paper
• The Role of Entrepreneurship in US Job Creation and Economic Dynamism

  2014cited by this paper
• Job-to-Job (J2J) Flows: New Labor Market Statistics from Linked Employer-Employee Data

  2014cited by this paper
• LEHD Data Documentation LEHD-OVERVIEW-S2008-rev1

  2014cited by this paper
• Housing Booms, Manufacturing Decline and Labour Market Outcomes

  2013cited by this paper
• Housing Collateral and Entrepreneurship

  2013cited by this paper
• House Prices, Collateral and Self-Employment

  2013cited by this paper
• Houses as ATMs: Mortgage Refinancing and Macroeconomic Uncertainty

  2013cited by this paper
• Household Balance Sheets, Consumption, and the Economic Slump*

  2013cited by this paper
• Home Equity Lending and Retail Spending: Evidence from a Natural Experiment in Texas

  2012cited by this paper
• Endogenous Gentrification and Housing Price Dynamics

  2012cited by this paper
• Entrepreneurial finance, credit cards, and race☆

  2012cited by this paper
• Liquidity Constraints, Household Wealth, and Entrepreneurship Revisited

  2012cited by this paper
• Ability or Finances as Constraints on Entrepreneurship? Evidence from Survival Rates in a Natural Experiment

  2012cited by this paper
• The Effect of Succession Taxes on Family Firm Investment: Evidence from a Natural Experiment

  2012cited by this paper
• The Supplemental Poverty Measure: Examining the Incidence and Depth of Poverty in the U.S. Taking Account of Taxes and Transfers in 2011

  2012cited by this paper
• The Collateral Channel: How Real Estate Shocks Affect Corporate Investment

  2012cited by this paper
• House Prices, Home Equity-Based Borrowing, and the U.S. Household Leverage Crisis

  2011cited by this paper
• Entrepreneurs, Jacks of all trades or Hobos?

  2011cited by this paper
• How Does Personal Bankruptcy Law Affect Start-ups?

  2011cited by this paper
• What Do Small Businesses Do?

  2011cited by this paper
• FINANCE AND DEVELOPMENT: A TALE OF TWO SECTORS

  2011cited by this paper
• Does debtor protection really protect debtors? Evidence from the small business credit market

  2011cited by this paper
• Intertemporal Consumption and Credit Constraints: Does Total Expenditure Respond to an Exogenous Shock to Credit?

  2010cited by this paper
• House Prices , Home Equity-Based Borrowing , and the U . S . Household Leverage Crisis *

  2010cited by this paper
• The Impact of Deregulation and Financial Innovation on Consumers: The Case of the Mortgage Market

  2010cited by this paper
• The Capital Structure Decisions of New Firms

  2010cited by this paper
• The Geographic Determinants of Housing Supply

  2010cited by this paper
• Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship

  2009cited by this paper
• The Collateral Channel : How Real Estate Shocks affect Corporate Investment

  2009cited by this paper
• Who Withdraws Housing Equity and Why

  2009cited by this paper
• Housing Bubbles

  2008cited by this paper
• The Consequences of Mortgage Credit Expansion: Evidence from the U.S. Mortgage Default Crisis

  2008cited by this paper
• Local bank financial constraints and firm access to external finance

  2008cited by this paper
• Entrepreneurs: Jacks of all Trades or Hobos?

  2007cited by this paper
• How do House Prices Affect Consumption? Evidence from Micro Data

  2007cited by this paper
• Employment that is not covered by state unemployment

  2007cited by this paper
• Liquidity Constraints , Household Wealth , and Entrepreneurship Revisited

  2005cited by this paper
• Liquidity Constraints, Household Wealth, and Entrepreneurship

  2004cited by this paper
• Entrepreneurship and Household Saving

  2004cited by this paper
• Housing Collateral, Consumption Insurance and Risk Premia: An Empirical Perpective

  2003cited by this paper
• Home is Where the Equity Is : Liquidity Constraints , Refinancing and Consumption

  2002cited by this paper
• Entrepreneurship and Bank Credit Availability

  2002cited by this paper
• Financial Markets and Firm Dynamics

  2001cited by this paper
• On the Evolution of the Firm Size Distribution: Facts and Theory

  2001cited by this paper
• Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self‐Employment

  2000cited by this paper
• Bankruptcy and Small Firms' Access to Credit Bankruptcy and Small Firms' Access to Credit

  1999cited by this paper
• The Economics of Small Business Finance: The Roles of Private Equity and Debt Markets in the Financial Growth Cycle

  1998cited by this paper
• The Financial Accelerator in a Quantitative Business Cycle Framework

  1998cited by this paper
• FINANCIAL DEPENDENCE AND GROWTH

  1998cited by this paper
• Credit Cycles

  1997cited by this paper
• House prices, the supply of collateral and the enterprise economy

  1996cited by this paper
• Self-Employment and Windfall Gains: Evidence from the Swedish Lottery

  1996cited by this paper
• The Effect of Credit Market Competition on Lending Relationships

  1995cited by this paper
• The Benefits of Lending Relationships: Evidence from Small Business Data

  1994cited by this paper
• Sticking it Out: Entrepreneurial Survival and Liquidity Constraints

  1994cited by this paper
• Finance and Growth: Schumpeter Might Be Right

  1993cited by this paper
• An Estimated Model of Entrepreneurial Choice under Liquidity Constraints

  1989cited by this paper
• Credit Rationing in Markets with Imperfect Information

  1981cited by this paper
• Housing Finance, and Limited Risk-Sharing in General

  year unknowncited by this paper
• Federal Reserve Bank of Minneapolis Research Department Staff Report 205 the Effect of State Policies on the Location of Industry: Evidence from State Borders*

  year unknowncited by this paper

• Natural disaster experiences and household entrepreneurship: Evidence from China

  2025cites this paper
• Does the housing purchase restriction policy promote entrepreneurship? Evidence from China

  2025cites this paper
• Promoter or inhibitor? The role played by housing prices on entrepreneurial vitality in China

  2025influential citation
• Entrepreneurship and Gentrification

  2025cites this paper
• On the Nature of Entrepreneurship

  2024cites this paper
• The Effect of Physical Collateral and Personal Guarantees on Business Startups

  2024cites this paper
• Mortgage Lock-In, Mobility, and Labor Reallocation

  2024cites this paper
• Stock Market Wealth and Entrepreneurship

  2024cites this paper
• Unemployment Benefits Expansion and Business Formation

  2024cites this paper
• Contract Completeness of Company Bylaws and Entrepreneurial Success

  2024cites this paper
• The digital economy and entrepreneurial dynamics: An empirical analysis of urban regions in China

  2024cites this paper
• Do high housing prices inhibit entrepreneurial activity?—Evidence from Yangtze River Delta cities, China

  2024cites this paper
• Does housing purchase affect entrepreneurship? -Evidence from urban households in China

  2024cites this paper
• Can real estate booms hurt firms? Evidence on investment substitution

  2024cites this paper
• Does relaxing household credit constraints hurt small business lending? Evidence from a policy change in Texas

  2024cites this paper
• An Overview of Indigenous Economies within Canada

  2024cites this paper
• How do housing prices affect innovation and entrepreneurship? Evidence from China

  2023cites this paper
• Can Everyone Tap into the Housing Piggy Bank? Racial Disparities in Access to Home Equity

  2023cites this paper
• Migration Fear and Minority Crowd-Funding Success: Evidence from Kickstarter

  2023cites this paper
• Financing Constraints, Home Equity and Selection into Entrepreneurship

  2021cites this paper
• Housing market booms in Chinese cities: boon or bane for urban entrepreneurship?

  2021cites this paper
• FINANCING CONSTRAINTS, HOME EQUITY AND SELECTION INTO ENTREPRENEURSHIP

  2021cites this paper
• Housing Supply and Affordability: Evidence from Rents, Housing Consumption and Household Location

  2020cites this paper
• Home Equity Lending, Credit Constraints and Small Business in the US

  2020influential citation
• Economic Consequences of Public Pension Accounting Rule Changes: Evidence from Housing Markets and Local Economies

  2020influential citation
• Does Collateral Value Affect Asset Prices? Evidence from a Natural Experiment in Texas

  2020cites this paper
• Entrepreneurial Spillovers from Corporate R&D

  2018influential citation