Research

This paper studies how parental fertility and bequest decisions influence children’s ability to become entrepreneurs in the presence of financial frictions. Entrepreneurs often face borrowing constraints, which can be alleviated by intergenerational transfers. Previous empirical evidence suggests that high-income parents typically have fewer children and leave larger bequests, reducing their children’s financing barriers relative to those from low-income families. However, most existing work on intergenerational transfers and entrepreneurship has emphasized bequests, giving less attention to fertility as a key dimension of parental resource allocation. To address this gap, I develop an overlapping generations model with endogenous fertility, bequest, and occupational choices, calibrated to US data. The model reveals that parental fertility and bequest decisions, when combined with financial frictions, distort children’s occupational choices and reduce efficiency. Counterfactual analysis shows that reducing financial frictions increases income per capita but slightly reduces the entrepreneurship rate, raises income inequality, and lowers intergenerational mobility. These findings suggest that financial policy should aim to promote development while addressing the concern of income concentration.

This paper examines the impact of individualism on innovation and economic development over time. I begin by extending the cross-country literature, using the same time-invariant cultural measures but incorporating a longer time horizon and additional control variables. The estimated effects of individualism are inconsistent across specifications and time periods, particularly when I control for institutions. To address the limitations of time-invariant measures, I then turn to a within-U.S. analysis and construct time-varying, ancestry-based measures of individualism. This variation enables the use of fixed effects to capture local institutions and isolate the influence of culture. The results suggest that individualism either has a negative impact or no significant effect on innovation and economic development, in contrast to the prevailing findings in the existing literature.