Document Type
Working Paper
Publication Date
2014
College/Unit
Chambers College of Business and Economics
Document Number
14-12
Department/Program/Center
Economics
Abstract
This paper examines how differences in state bankruptcy laws, specifically the amount of the homestead exemption, affect business location decisions within a few miles of the state boundary. By focusing on these border areas, we are able to more effectively control for unobserved local attributes and isolate the effect of more wealth protection. We find that an increase in the homestead exemption attracts new businesses. We also find that a more generous homestead exemption has a positive impact on existing businesses, suggesting that asset protection through bankruptcy law encourages successful entrepreneurs to incur the risks. Our results indicate that the wealth protection provided by personal bankruptcy law is an important policy tool that state governments can use to attract new, successful businesses owners.
Digital Commons Citation
Rohlin, Shawn M. and Ross, Amanda, "State Bankruptcy Law and Entrepreneurship: Evidence from a Border Analysis" (2014). Economics Faculty Working Papers Series. 105.
https://researchrepository.wvu.edu/econ_working-papers/105