Households are regularly confronted with decisions involving risk, both in their professional lives and in managing their financial assets. Understanding how individuals navigate these risks in the labor as well as the financial markets provides valuable insights into broader economic patterns. The thesis aims to contribute to the literature by identifying previously overlooked factors.

Article I investigates whether unemployment risk motivates employees to become entrepreneurs. By exploiting a quasi-experiment setting in Sweden, this article is among the first to empirically show that unemployment risk could promote entrepreneurship. In addition, the nudged entrepreneurs do not underperform, in terms of both business quality and personal income, when compared with their counterparts. The findings are expected to help policymakers better design employment protection legislation.

Article II examines how one’s cultural origins relate to the decision to enter entrepreneurship. Using a sample of second-generation immigrants in Sweden, this article documents that children of immigrants from more risk-loving cultures are more likely to start a business, although of poorer quality. This study also finds that entrepreneurs with parents from cultures with higher risk appetite earn a lower personal income. Furthermore, the analysis demonstrates that culturally transmitted risk appetite has significant effects beyond individual and parental socio-economic characteristics.

Article III evaluates the portfolio diversification gap between immigrant and native-born investors using a comprehensive administrative dataset from Sweden. I document that immigrant investors incur a 37% higher return loss compared to natives, driven predominantly by underdiversification instead of high risky share. This gap persists even among second-generation immigrants. Moreover, immigrants with native-born partners or from countries with higher financial literacy levels experience lower return losses. These findings highlight the need for policies that facilitate social integration and promote financial education to improve immigrants' financial outcomes.

We use Swedish administrative data to study the role of unemployment risk in salaried employees’ decisions to become entrepreneurs. Using the 2001 relaxation of Sweden’s last-in-first-out (LIFO) dismissal rule as an exogenous shock to unemployment risk, we find that employees facing increased unemployment risk are more likely to become entrepreneurs. The effect is more pronounced for employees with longer tenure, as they were newly exposed to greater unemployment risk. When we track entrepreneurs’ income dynamics and the performance of their ventures, we find that entrepreneurs who used to face greater unemployment risk do not underperform compared to other entrepreneurs. Our results provide some of the first empirical evidence of how employees respond to increased unemployment risk.

This paper investigates the effects of cultural origin on entrepreneurship. Using Swedish registry data on second-generation immigrants and risk appetite measures from the Global Preference Survey (GPS), we investigate whether risk preferences in parents’ home countries affect entrepreneurship. We find that children of immigrants from more risk-loving cultures are more likely to start up a business, although of poorer quality. We also find that entrepreneurs with parents from cultures with higher risk appetite earn a lower personal income. Our analysis demonstrates that culturally transmitted risk appetite has significant effects beyond individual and parental socioeconomic characteristics.

This paper examines the portfolio diversification gap between immigrant and native-born investors using a comprehensive administrative dataset from Sweden. Leveraging a carefully matched investor sample, I document that immigrant investors incur a 37% higher return loss compared to natives, driven predominantly by underdiversification instead of high risky share. This gap persists even among second-generation immigrants, suggesting intergenerational disparities in wealth accumulation. I identify two key drivers: social integration and financial literacy. Immigrants with native-born partners or from countries with higher financial literacy levels experience lower return losses. However, merely extending the duration of stay in Sweden does not mitigate the gap. These findings highlight the need for policies that facilitate social integration and promote financial education to improve immigrants’ financial outcomes.