Poverty and entrepreneurial pursuits

What is it about?

We look at the causal relationships between inequality, poverty and entrepreneurship. Findings from longitudinal analyses of a dataset from all 50 US states over an 18-year period provide robust support for our belief that income inequality influences entrepreneurial activity, and entrepreneurial activity alleviates absolute poverty. More interesting, our results suggest that antipoverty public policy aimed at encouraging work (i.e. Earned income tax credit, EITC) can be detrimental to entrepreneurial activity.

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Why is it important?

It is important that public policy efforts aimed at poverty alleviation should be linked with those aimed at encouraging additional entrepreneurship.