Entrepreneurship: The role of extreme events

We use aggregate country data as well as individual level survey to uncover, for the first time, the effect of extreme events such as natural disasters and terrorist attacks on entrepreneurial activity. We find that natural disasters and terrorist attacks influence individual perceptions of the rewards to entrepreneurship and, more surprisingly, extreme events affect entrepreneurship rates positively in a robust and significant way.

► Natural disasters and terrorism affect perceptions of business opportunities. ► Natural disasters and terrorist attacks impact country entrepreneurship rates. ► Entrepreneurial activity rises after terrorist attacks and falls after disasters. ► The impact of extreme events varies across gender, education, age, and income group.