Cover: Three Essays on Entrepreneurship in India and the U.S.

Three Essays on Entrepreneurship in India and the U.S.

Policies, Social Ties and Mobility

by Elizabeth D. Brown

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Abstract

Across the globe, policymakers view entrepreneurship as a potential route out of poverty, even for the most disadvantaged. Many countries have developed policies to encourage business creation within this group. These dissertation papers explore the role entrepreneurship plays in the lives of the economically disadvantaged in both India and the US. The first paper examines how India's Micro, Small and Medium-sized Enterprise (MSME) policies affect low-income and female entrepreneurship. In addition to important policy effects, a key finding highlights that entrepreneurial social ties significantly correlate with early-stage entrepreneurship, regardless of income level. The second paper explores this result by instrumenting for the endogeneity of entrepreneurship and social ties using past vernacular newspaper circulation and population density. Instrumental variables regression substantiates the non-instrumented finding indicating social ties play a non-trivial role in increasing early-stage entrepreneurship in India. Finally, analysis of data from the US Panel Study of Income Dynamics in the third paper finds no evidence that self-employment provides any particular advantage in achieving upward mobility, or in reducing downward mobility. In contrast, family business ownership associates with more upward mobility and less downward mobility. We instrument for the endogeneity of family business ownership and mobility using tax schedule progressivity. Instrumental variables regression results substantiate the non-instrumented findings but should be interpreted with some caution.

This document was submitted as a dissertation in June 2012 in partial fulfillment of the requirements of the doctoral degree in public policy analysis at the Pardee RAND Graduate School. The faculty committee that supervised and approved the dissertation consisted of Krishna Kumar (Chair), Susan Gates, and Joanne Yoong.

This report is part of the RAND Corporation dissertation series. PRGS dissertations are produced by graduate fellows of the Pardee RAND Graduate School, the world's leading producer of Ph.D.'s in policy analysis. The dissertations are supervised, reviewed, and approved by a PRGS faculty committee overseeing each dissertation.

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