CARE Seminar: Yueyuan Ma, University of California, Santa Barbara

Speaker

Yueyuan Ma, University of California, Santa Barbara

Title

“Expectations versus Reality in Business Formation” 

Abstract

Using comprehensive administrative data on nearly 17 million business applications and outcomes, we examine how potential entrants’ expectations about entry as an employer business and initial employment compare with realizations. On average, potential entrants overestimate employment within a year of application, mainly because many expect to enter but do not. Those who both expect and realize entry, however, tend to underestimate employment. Expectation errors exhibit substantial variation and systematically vary with application characteristics and local conditions. The expectation errors also predict subsequent employment outcomes. A model with heterogeneous priors, learning, and selection before entry can account for the core findings.

Biography

Yueyuan Ma is an assistant professor in the economics department of the University of California, Santa Barbara. Her research interests are macroeconomics, economic growth, innovation, and labor. She has applied empirical, theoretical, and quantitative-theoretic methods to understand the determinants of growth and inequality. Yueyuan got her Ph.D. in economics from the University of Pennsylvania.