IEAS Working Paper No. 26-A001, July 2026

Abstract
This paper examines the causal effect of financial resources on entrepreneurial decisions
by exploiting wealth shocks from lottery winnings. Using administrative panel
data that link lottery winners to business registration records in Taiwan, we employ
a triple-differences design that leverages variation in prize size and compares current
versus future lottery winners. The results show that receiving a large lottery prize
exceeding 1.5 million NT$ (approximately 50,000 US$) increases the number of businesses
owned by 0.025 (a 12.3% increase relative to the baseline mean), with effects
that persist over at least five years. For individuals without prior business ownership,
large windfalls raise the probability of entrepreneurial entry by 1.5 percentage points.
This entry response is driven by individuals with high pre-winning earnings but no liquid
savings and is concentrated in incorporated rather than unincorporated ventures.
For existing business owners, large windfalls increase incorporated business holdings
by 10.7%, but do not significantly affect the continuation of businesses owned before
winning.