"The Impact of Equity Crowdfunding on Frictions in Startup Finance" (Job Market Paper)
It is well known that firms led by females and those located in areas lacking developed financial markets struggle to obtain capital investment. Equity crowdfunding, the process of financing a business with investment from a group of individuals over the internet, offers a solution to this problem by increasing firm access to investors. This fundraising process is not permitted in most parts of the world, but was recently legalized in the United States through the 2012 JOBS Act. In this study, I evaluate the effects of the legalization of accredited equity crowdfunding on startup financing in the United States. Using a novel dataset of startups and financing sources, I find that the entry of accredited equity crowdfunding mitigated the negative effects of limited local capital and decreased the gender gap in entrepreneurial finance. I estimate that the gender gap in total funding to firms decreased by 20 percentage points after equity crowdfunding was legalized, cutting the gap between total funding to male entrepreneurs and total funding to female entrepreneurs in half.
"Local Conditions during the Great Depression and Later in Life Investment Decisions"
A growing literature in economics explores the relationship between personal experiences with the business cycle and belief/preference formation. There exists substantial evidence using national variation in business cycles that personal experiences hold substantial weight in decision-making. However, the use of national aggregates limits researchers to the use of variation in decisions across birth-cohorts. Using state-level personal income for the majority of the 20th century, I investigate whether individual investment decisions are altered by sub-national economic fluctuations. Along with providing evidence that preferences/beliefs about investment begin to form in late childhood, my results suggest that children who grew up in states with lower average personal income invest less in risky assets throughout their lives, invest more in property, and are less likely to be self employed.
[Working paper available upon request]
Research in Progress
"Returns to Entrepreneurial Experience over the Business Cycle"
This project focuses on how serial entrepreneurs perform relative to first-time entrepreneurs. In particular, I am interested in the returns to previous entrepreneurial experience at different points in the business cycle. Do returns to entrepreneurship experience change when a founder is exposed to either positive or negative macroeconomic shocks? I consider two different ways through which entrepreneurial experience influences firm outcomes: through access to resources and through business strategies. I also investigate the role that previous experience has on firm strategy under different macroeconomic conditions. Do seasoned entrepreneurs pursue different funding strategies during boom times vs. recession times? For example, a more experienced entrepreneur may pursue external funding more often during a recession because they expect that they will require more capital to ensure growth. This is because a new firm may need to market its product more to profit during a recession. The Kauffman Foundation has sponsored my access to the Data Enclave version of the Kauffman Firm Survey for this project. I check the robustness of these results with data from the CrunchBase API, which is an online database of startups and their funding sources.
"The Long Term Effects of Participation in the Civilian Conservation Corps" (with Price Fishback (Arizona) and Shari Eli (Toronto))
The Great Depression was the most severe economic shock in American history and considerably transformed the lives of Americans in both the 1930s and 1940s. The United States faced an unemployment rate of 25% in the height of the Depression, which meant many were unemployed and experienced harsh living conditions. In order to help those who were hit by the downturn, President Franklin Roosevelt proposed a `New Deal' for the American people. The New Deal was a series of programs designed to provide relief for the poor, recovery of the economy to normal levels, and reform so that another depression would be unlikely. This project seeks to analyze the impacts of one of the New Deal employment programs, the Civilian Conservation Corps, henceforth CCC. This study is the first to analyze long-run impacts of a large-scale unemployment relief program. The project will address the questions: Did the CCC influence migration across the country? Did participation in the CCC improve participant's subsequent careers? Were participants able to achieve more than they would have without the CCC?