Working Paper: NBER ID: w30249
Authors: Joseph Engelberg; Jorge Guzman; Runjing Lu; William Mullins
Abstract: Republicans start more firms than Democrats. In a sample of 40 million party-identified Americans between 2005 and 2017, we find that 6% of Republicans and 4% of Democrats become entrepreneurs. This partisan entrepreneurship gap is time-varying: Republicans increase their relative entrepreneurship during Republican administrations and decrease it during Democratic administrations, amounting to a partisan reallocation of 170,000 new firms over our 13-year sample. We find sharp changes in partisan entrepreneurship around the elections of President Obama and President Trump, and the strongest effects among the most politically active partisans: those that donate and vote.
Keywords: entrepreneurship; partisanship; political identity; economic behavior
JEL Codes: G41; G51; L26; M13
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Political affiliation (D72) | Entrepreneurial activity (L26) |
| Republicans (D72) | Likelihood of starting businesses (L26) |
| Democratic administrations (P16) | Likelihood of starting businesses (L26) |
| Republican administrations (E65) | Likelihood of starting businesses (L26) |
| Political regime changes (P39) | Entrepreneurial behavior (L26) |
| Mismatched individuals (J79) | Likelihood of starting a business (M13) |
| Most politically active individuals (D72) | Sensitivity to political changes (P26) |
| Election of Barack Obama (K16) | Startup rates in Democratic counties (J49) |
| Election of Donald Trump (K16) | Startup rates in Republican counties (M13) |