Entrepreneurial Persistence of the Underprivileged through Informal Sector During the Pandemic

Abstract

We consider how new firm creation responded to the pandemic. While the pandemic led to overall decrease in entrepreneurial activity, underprivileged social groups continued to engage in entrepreneurship, and particularly in informal sector entrepreneurship. Furthermore, marginalised but closely knitted social groups, like the indigenous population, seem in a good position to engage in informal entrepreneurship at a time of urgent need. We test these intuitions utilising individual Global Entrepreneurship Monitor data from Chile that include evaluation of the government policy response. Among others, we find that crisis brought a reversal of patterns of correlation between prior income and propensity to engage in entrepreneurship.