Better welfare and insurance systems can encourage entrepreneurship

To encourage entrepreneurship, it is important to have a complete system of insurance and welfare. This will help to reduce the risk premium of starting a new business. The welfare system is extremely important. People who start new business have risks to become bankrupted. People who start new business are usually either very poor or very rich. On the one hand, the poor people find that their living standards cannot be any lower even if they fail in their business. On the other hand, the rich people do not feel their loss from new business failure will be significant to their wealth. With a good welfare system and a complete insurance system, the expected loss from starting a new business will be smaller, giving more incentives to the middle class people to start their business. This will be super beneficial to the whole society, as the most of middle classes receive higher education, which means their business ideas may have higher probabilities to succeed and higher returns.