Simulation of Public Cash Transfer Programs on US Entrepreneurs' Financing Constraint

TL;DR

This paper evaluates the impact of large-scale public cash transfer programs on US startups, finding they mainly increase startup size and have limited effects on new business creation and overall productivity.

Contribution

It provides a policy exercise analyzing how large cash transfers influence startup size, productivity, and output in the US, highlighting the importance of entrepreneurs' ability.

Findings

Cash transfers modestly increase startup size

Limited impact on new startup numbers

Slight boost to aggregate productivity and output

Abstract

In this paper, I conduct a policy exercise about how much the introduction of a cash transfer program as large as a Norwegian-sized lottery sector to the United States would affect startups. The key results are that public cash transfer programs (like lottery) do not increase much the number of new startups, but increase the size of startups, and only modestly increase aggregate productivity and output. The most important factor for entrepreneurs to start new businesses is their ability.