This paper estimates the causal e↵ect of changes in home equity and household leverage on entrepreneurship and business ownership. Using a large individual-level survey dataset, we show that higher home equity increases the probability of transition into entrepreneurship, while higher household leverage has a significantly positive e↵ect on business equity ownership. These e↵ects are stronger in "hot" housing markets where agents expect house prices to keep increasing in the future. Our results

more »

... persist when we use the topological elasticity of housing supply to generate variation in home equity that is orthogonal to entrepreneurial choice. JEL classification: G21, L26