CREED Seminars Amsterdam

Speaker(s)
Michael Kosfeld (Goethe University Frankfurt)
Date
2013-01-17
Location
Amsterdam

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This paper investigates the hypothesis that solidarity obligations hinder entrepreneurial activity and thus investment and long term economic progress. We conduct a field experiment and a real effort experiment with small entrepreneurs in Burkina Faso in which participants are made a lucrative job offer under different treatment conditions. Results show that implicit and explicit solidarity obligations as well as the expectation of future demands for financial support lead to a significant reduction in entrepreneurial activity.

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