February 27, 2025: 11:00 am - 12:15 pm ET
February 27, 2025: 11:00 am - 12:15 pm ET
Geoffrey Borchhardt (U Oregon) - will present "Good jobs, bad jobs, and the long-term earnings consequences of self-employment"
Abstract: Most entrepreneurs fail, raising the question of how they fare upon returning to the labor market. While prior work points to an earnings penalty, it assumes a specific type of entrepreneur: someone who would have engaged in stable, traditional employment had they not entered self-employment. Instead, rising levels of precarious and non-standard work imply that many face different employment arrangements and evaluation criteria. Do entrepreneurs in precarious labor markets get rewarded for their experience? Or do employers view them to have engaged in just another form of casual employment? Using novel, high-frequency survey data from India, I adjudicate between competing predictions. First, replicating prior work, I find evidence of an earnings penalty for former founders in traditional, salaried labor markets. In precarious labor markets, however, the earnings trajectories of former entrepreneurs look similar to control cases on average. But this hides important nuance: Entrepreneurs who remained self-employed for only a short amount of time experience a small, but persistent, penalty, akin to switching occupations. In contrast, more successful entrepreneurs reap a large earnings premium. For them, entrepreneurship appears to act as a signal of ability to future employers. Repeat entrepreneurs also report increased earnings.
March 12, 2025: 11:00 am - 12:15 pm ET
March 12, 2025: 11:00 am - 12:15 pm ET
Jean Joohyun Oh (Carnegie Mellon) - will present "The Class Gap in Venture Capital Funding: The Effect of Elite Private High School Education"
Abstract: This paper examines the impact of founders' higher social class backgrounds on their likelihood of securing venture capital (VC) funding in the US. Analyzing data from more than 140,000 founders whose startups were founded in 2000-2020, I find that those who graduated from elite private high schools are more likely to raise VC funding. This advantage persists after accounting for gender and race and is partly due to privileged founders' higher likelihood of attending top universities, having more work experiences, and possessing more social connections. I find a similar class advantage among graduates of public high schools with varying neighborhood income levels. Notably, the class advantage is unique to VC funding and does not extend to non-VC funding sources such as crowdfunding, angel investment, accelerators/incubators, and grants, suggesting the influence of demand-side factors such as VC investors' preferences. However, founders' elite backgrounds do not correlate with an increased likelihood of successful exits, calling into question the assumption that VC investors prefer founders from privileged backgrounds due to their higher expected likelihood of success.
