Dr. Berna Demiralp Presents on Entrepreneurial Choice, Liquidity Constraints and Human Capital

COLLEGE PARK, MD., -  April 1, 2011 – Old Dominion University (ODU) Assistant Professor of Economics Dr. Berna Demiralp presented at Optimal Solutions Group’s, LLC, (Optimal’s) Brown Bag on Friday, March 25. Dr. Demiralp’s paper, titled, “Wealth, Human Capital, and the Transition to Entrepreneurship,” co-authored by Dr. Johanna Francis (Fordham University), explores the importance of liquidity constraints in the entrepreneurial choice decision and whether it varies across individuals with different levels of human capital.

The authors found that the relationship between wealth and the probability of becoming an entrepreneur is statistically insignificant for individuals with a medium- to high-level of human capital, measured by education and experience. This suggests that liquidity constraints may not be an important deterrent to entrepreneurship for individuals with higher levels of human capital. Among individuals with low human capital, there is a negative association between wealth and entry into entrepreneurship, which suggests that adverse selection and the disciplining effect of external finance may be playing an important role in the small business formation by such individuals.

Dr. Demiralp was invited by Optimal’s Workforce Development and Social Policy Research Center (WDSPRC) that is currently working on projects related to job creation and ways to improve small business operations. She obtained a Ph.D. in Economics from John Hopkins University in 2006.  Her research interests include labor and demographic economics and applied microeconomics.


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