Workplace Flexibility and Entrepreneurship

Working at home benefits workers with low fixed costs and the ability to engage in joint market and household production. We evaluate a large-scale reform in Singapore that allows the possibility of business creation at one’s residential property and study whether the option of home-based entrepreneurship spurs entrepreneurial activities. Difference-in-difference estimate shows that the reform leads to a significantly higher level of business creation. Additional new firms in response to the reform are on average smaller and have a higher survival rate in the long run. The new entrepreneurs are more likely to be the “discouraged workers” (i.e. minority group or too young/old) and from community with lower income. We also exploit the regional variation in the residential land density to assess the impact on aggregate economic outcomes. Regions more exposed to the reform experience higher rate of price growth.