Who Makes Money From Entrepreneurship? : Life Course Pathways to Entrepreneur Earnings

In respond to a call from Carter (2011) to research the determinants of earnings from entrepreneurship across the business life cycle, we propose a life course framework and test this to explore two questions: (1) how capability to earn from entrepreneurship emerges from accrual of resources across the life course of the individual and their household, as this relates to the inter-generational transmission of resources and, so, to a class process; (2) how capacity to earn from entrepreneurship by applying resources to opportunity emerges from the entrepreneurs’ position in household work and economic strategies. We use data from 18 waves of a nationally representative longitudinal database, British Household Panel Survey, covering measures at both an individual and household level, for the period 1991 – 2008. This large and highly reliable dataset is analysed via multilevel growth curve modelling to evaluate the influence of resource histories and household strategies on entrepreneur earnings across the business life course. The results provide evidence of a higher class pathway to entrepreneur earnings, but this is not consistent. In particular, educational achievement is not significantly related to entrepreneur earnings. We propose arguments that account for this complexity, relating to selection effects in terms of the types of people in each class starting businesses, and mediating effects from class cultures and household strategies. We detect the possibility of some specific routes of social mobility to entrepreneur earnings that warrant further research. Household strategies have a much more unequivocal effect on entrepreneur earnings, which are higher if entrepreneur labour is unfettered by housework and childcare and motivated by sole breadwinner responsibility. As household roles in Britain are highly gender divided, we propose that household strategies are a primary explanation of the large sex difference in entrepreneur earnings. The research points to a significant research agenda and develops understanding of how entrepreneurship emerges from socially structured positions of action in time. Novel implications for theory and policy are outlined.