Who are the Entrepreneurs? Evidence from Taxpayer Data

How does the definition of “entrepreneur” affect research results? We use a 12-year panel of individual tax returns to investigate the relationship of the definition of business form to the personal characteristics of entrepreneurs. Tax returns present multiple indicators of business activity—schedule C, partnerships, subchapter S corporations, etc. We document the extent to which various forms of business income are reported, investigate the importance of access to capital and debt, and finally examine the transitional dynamics among alternative business formats. We thank the Center for Policy Research at Syracuse University, the Center for Business and Economic Research at the University of Tennessee, and the National Science Foundation for their support. We thank Esther Gray for her help in preparing the manuscript and Karie Barbour for superb research assistance. Finally, we thank participants at the 12th Annual Entrepreneurial Finance and Business Ventures Research Conference for many helpful comments.