Entrepreneurship and Regional Windfall Gains: Evidence from the Spanish Christmas Lottery
46 Pages Posted: 20 Dec 2018 Last revised: 26 Apr 2021
Date Written: April 26, 2021
We estimate the effect of transitory shocks to local income on entrepreneurship using regional windfall gains arising from the Spanish Christmas Lottery. This lottery provides a unique setting as prizes are geographically concentrated and distributed among thousands of households. We find that transitory increases in income lead to higher firm and job creation. The entrepreneurial response is more pronounced in recessions, in regions with poorer access to finance and in less economically developed regions. Firms created in winning provinces are larger and more profitable, and are likely to survive longer. These results suggest that place-based money transfers have long-lasting effects on the corporate sector.
Keywords: Entrepreneurship, Firm Creation, Disposable Income, Regional Development, Place-Based Policy, Business Cycle
JEL Classification: D14, L26
Suggested Citation: Suggested Citation