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The B.E. Journal of Economic Analysis & Policy

Editor-in-Chief: Jürges, Hendrik / Ludwig, Sandra

Ed. by Auriol , Emmanuelle / Brunner, Johann / Fleck, Robert / Friebel, Guido / Mendola, Mariapia / Requate, Till / Tsui, Kevin / Wichardt, Philipp / Zulehner, Christine

4 Issues per year


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VolumeIssuePage

Entrepreneurship and Household Saving

William M. Gentry1 / R. Glenn Hubbard2

1Williams College,

2Columbia University,

Citation Information: Advances in Economic Analysis & Policy. Volume 4, Issue 1, ISSN (Online) 1538-0637, DOI: 10.2202/1538-0637.1053, August 2004

Publication History

Published Online:
2004-08-27

Abstract

Using data from the 1983 and 1989 Federal Reserve Board Surveys of Consumer Finances, we quantify three findings about entrepreneurial saving decisions and their role in household wealth accumulation. First, entrepreneurial households own a substantial share of household wealth and income, and this share increases throughout the wealth distribution and the income distribution. Second, the portfolios of entrepreneurial households, even wealthy ones, are very undiversified, with the bulk of assets held within active businesses. Third, wealth-income ratios and saving rates are higher for entrepreneurial households even after controlling for age and other demographic variables. Taken together, these findings suggest that studies of household saving decisions in general and of the savings decisions of wealthy or high-income households in particular have paid insufficient attention to the role of entrepreneurial decisions and their role in wealth accumulation.

Keywords: entrepreneurship; saving; household portfolios

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