Key Findings: Entrepreneurship

Cash increases interest in entrepreneurship.

Recipients exhibited increased interest in entrepreneurship and were more likely to have an entrepreneurial mindset.¹We measure entrepreneurial interest by asking whether or not a participant has an idea for a business and how likely they are to start a business in the next five years. We find significant effects of the cash for both measures of entrepreneurial interest. Entrepreneurial mindset, or orientation, is measured as a participants’ willingness and preference toward taking financial risks.

Though this interest and intent did not translate into a significant increase in entrepreneurial activity for the average recipient, there was a notable increase in entrepreneurial activity for underrepresented groups. Black and female recipients were more likely to start or help start a business.²

On average:

Recipients were 3 percentage points more likely to report having an idea for a business.³ This effect grew over the course of the program, reaching nearly 5 percentage points by the third year — an 8% increase over the average among control participants. Descriptively, 63% of recipients said they had an idea for a business at the end of the program, compared to 57% of control participants.
Recipients’ reported likelihood of starting a business within the next five years increased 3% relative to the average score for control participants.⁴
In the first year of the program, the likelihood of reporting purchasing materials to start a business increased by 3 percentage points for recipients. We asked participants if they made any special purchases for a business, and the visualization below shows some of their responses.

Have you made any special purchases for a business? If so, what are they? Word cloud showing most common answers. From 460 free response questions, grouped by algorithm. Most common answers include computer equipment, crafting supplies, cosmetology supplies, and power tools. Other answers: construction tools, kitchen supplies, music instruments and audio equipment, books, circuit machines, shipping materials, art materials, office supplies, massage equipment, software, online courses, lawn tools, photography equipment, woodworking tools, and moving equipment.

There was a notable increase in entrepreneurial activities for underrepresented groups.

The impact of the cash on entrepreneurship appears to be greatest for Black recipients.²

Black recipients were 8 percentage points more likely to report having an idea for a business—a 12.5% increase compared to the average among Black control participants.⁵ By year three, 74% of Black recipients said they had an idea for a business at the end of the program compared to 66% of Black control participants.
In the third year of the program, Black recipients were 9 percentage points more likely to report ever starting or helping to start a business—a 26% increase from the average for Black control participants.⁶ By year three, 43% of Black recipients reported having ever started or helped start a business, compared to 34% of Black control participants.

The impact of the cash on entrepreneurship was also greater for female recipients.²

Female recipients were 5 percentage points more likely to report having an idea for a business— an 8% increase relative to the average for female control participants.⁷ 63% of female recipients said they had an idea for a business at the end of the program, compared to 57% of female control participants.
In the third year of the program, female recipients were 5 percentage points more likely to report ever starting or helping to start a business—a 15% increase from the average female control participant.⁸ In year three, 36% of female recipients said they started or helped start a business compared to 31% of female control participants.

At the start of the program, we asked participants what job they hope to have in 10 years. Many participants expressed dreams of starting their own businesses.

Though many participants had dreams of starting their own businesses, the cash alone may have been insufficient to enable most to actually do so. Recipients who were able to take steps toward starting their own businesses seemed able to because they could stack the cash with additional resources. For example, although recipients who had lower household incomes at enrollment reported more interest in starting a business, recipients who had higher household incomes at enrollment were more likely to report purchasing business materials. This suggests that although the cash had an effect on entrepreneurial interest and mindset for recipients on average, those who were in better financial positions at the start of the transfers were more likely to be able to act upon these interests.