Babies, Business and Debt

Paper Session

Saturday, Jan. 7, 2017 1:00 PM – 3:00 PM

Swissotel Chicago, St Gallen 2
Hosted By: Association for Evolutionary Economics & Association for Social Economics
  • Chair: Steven Pressman, Colorado State University

Divergent Fortunes: Can Economic Pressures and Financial Strength Explain Differences in Entrepreneurship Between Younger and Older Households?

Christian E. Weller
University of Massachusetts-Boston
Jeffrey Wenger
RAND Corporation


Entrepreneurship among households 50 years and older has grown since the late 1980s, while it has fallen for younger households. The divergence in entrepreneurship may result from different responses to economic pressures, especially long-term unemployment and more volatile earnings in wage and salary employment. Older households may choose to pursue self-employment when facing economic pressures since they may not expect future gains in wage and salary employment, while younger households, considering a longer future time horizon, may delay their self-employment decisions in the hopes of seeing improvements in wage and salary employment. Alternatively, households of all ages may respond similarly to changes in financial strength – more wealth as collateral, greater credit access and increased opportunities to diversify income as buffer against risky business income. Older households have seen gains in financial strength, while younger households have not. We use data from the Federal Reserve’s Survey of Consumer Finances to test these competing hypotheses. Our descriptive statistics and multinomial logit regressions suggest that economic pressures are only playing a minor role in determining entrepreneurship among younger households and have no measurable effect on older entrepreneurship. Financial strength, though, matters for both older and younger entrepreneurship, but more so for older households and the gap has grown over time. The divergence in financial strength – partially a result of rising wealth inequality – and the growing gap in sensitivity to the financial strength by age are a key explanation for the different entrepreneurship experiences of younger and holder households.

Debt and Business Formation: The Impact of Student Debt Upon Entrepreneurship in Wisconsin

Thomas Kemp
University of Wisconsin-Eau Claire


Small business is the source of most new job creation. There is however a growing body of literature that shows that rising student debt is having an adverse effect upon new business startups. Using county census data applied to a model developed by Ambrose et. Al. (2015) this study attempts to quantify the reduced number of firms created due to statewide student debt load. From these results standard input/output analysis is used to estimate statewide job losses resulting from Student debt. We conclude that a cost/benefit case may be made for debt forgiveness.

Institutional Contexts and Entrepreneurship - History Revisited

Regina Frank
Loughborough University


This paper discusses historic determinants of today’s economic development and entrepreneurship by comparing and contrasting different religious institutions, their hierarchy and values and its influences on North and South American pioneers, respectively, in the 16th and 17th centuries. It will be hypothesized that in predominantly Protestant regions, entrepreneurial activity led to long-term regional economic growth and development with profits being reinvested locally. In contrast, in regions dominated by Catholic colonizing powers, raw materials were extracted, and less profits reinvested locally; instead, created wealth was be concentrated in the hands of a few and transferred back to colonizers, commodity exports benefitted the crown, mirroring the hierarchy of the Catholic Church in Europe. By drawing parallels between past formal and informal institutions informed by religion and culture, the ties of pioneers, settlers and colonizing powers in North and South America and today’s regional entrepreneurial activity, this paper applies institutional and social capital theories to entrepreneurship over time. It is postulated that the long term impact of the autocracy and values of different religious institutions on regional economic and entrepreneurial development can still be identified by comparing and contrasting today’s levels of entrepreneurial activity in North and South America, measured by the Global Entrepreneurship Monitor ('GEM').

Age of Financial Majority

Timothy A. Wunder
University of Texas-Arlington


The unrestrained power of the market economic narrative becomes frighteningly clear when financial security becomes the dictating force on human procreation. The common man’s desire for “right and honest living holds him to a submissive quietism” even with respect to the most fundamental call of human biology; the desire to have children. This disturbing control is so complete that it is common for people to discuss how irresponsible it is for a couple to have children they ‘can’t afford.’ This paper will use common data on debt, earnings, and costs of living to calculate at what age an average young American couple would be secure enough to have a child. This calculation will be made over time to offer a measure of financial majority. The age of majority generally connotes when a youth becomes a full adult and nothing so clearly suggests adulthood as being ready to have children. If the current system “controls the conditions of life” so thoroughly that young people delay or decline having children then there is a profound problem facing the United States.

The Burdens of Student Debt: Are Student Loans Keeping Young Adults From Moving on with Life?

Christina Curley
Colorado State University


The purpose of this paper is to examine whether student loan debt is preventing or delaying college graduates from achieving certain milestones in life, such as purchasing a home, getting married, and having children. While news articles and surveys indicate that some student loan borrowers are finding themselves in situations where they must delay these milestones, there is little empirical evidence to indicate that this is a widespread issue. In addition, I pay particular attention to whether any impact of student loans differs by gender, and if a difference exists, what the nature of that difference is. Using the Baccalaureate and Beyond Survey 2008-2012, and with gender differences in mind, I test the impact of student loan repayment burden on the probability of homeownership, marriage, and presence of children. Preliminary results indicate that higher student debt burden is negatively related to the probability of homeownership for men and women, and that cumulative student debt level is negatively related to the probability of getting married and having children for women. In addition, the mean monthly student loan payment-to-income ratio is found to be slightly higher for women than men.
Jeffrey Thompson
Federal Reserve Board
John Watkins
Westminster College
Sandy Baum
Urban Institute
Robert H. Scott, III
Monmouth University
JEL Classifications
  • I2 - Education and Research Institutions
  • M2 - Business Economics