Scandinavian Working Papers in Economics

Working Paper Series,
Research Institute of Industrial Economics

No 893: Billionaires

Peter Leeson and Tino Sanandaji ()
Additional contact information
Peter Leeson: George Mason University, Postal: Department of Economics, MS 3G4, Fairfax, VA 22030, USA
Tino Sanandaji: Research Institute of Industrial Economics (IFN), Postal: and Harris School of Public Studies, Chicago, IL 60637

Abstract: Existing studies of entrepreneurship focus on entrepreneurs whose individual contribution to wealth creation is typically trivial: self-employed persons. This paper investigates entrepreneurs whose individual contribution to wealth creation is enormous: billionaires. We explore the relationship between economic development, institutions, and these contrasting kinds of entrepreneurs. We find that the institutions consistent with self-employed entrepreneurs di¤er markedly from the ones consistent with billionaires. Further, only the latter are consistent with the institutions that underlie economic prosperity. Where well-protected private property rights and supporting, market-enhancing institutions flourish, so do billionaires. But self-employed entrepreneurs don't. Where private property rights are weakly protected and interventionist institutions flourish, so do self-employed entrepreneurs. But billionaires don't.

Keywords: Billionaires; Entrepreneurship; Self-employment; Institutions

JEL-codes: H20; L26; L53; O17

30 pages, January 2, 2012

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