Entrepreneurship Does Pay∗
نویسنده
چکیده
Existing evidence suggests that returns to entrepreneurship are low relative to the returns to wage work. These findings have been associated with non-pecuniary benefits, and more generally with heterogeneity in preferences, rationality or beliefs. In this paper I challenge this view. I extend the data and show that the differential in earnings is in fact U-shaped, with entrepreneurs earning more than wage workers both early and late in their lives. I argue that the difference in the earnings profile can be rationalized in the context of a life-cycle model of occupational choice where agents are fully informed, face no uncertainty, are fully rational, and ex-ante identical. I estimate this model and show that the lifetime returns to entrepreneurship can in fact be identical to those of being a wage worker. ∗I wish to offer my warmest thanks to Boyan Jovanovic and Virgiliu Midrigan. I would also like to thank the participants of the Stern Macro Lunch Series, the Stern Berkley Center for Entrepreneurial Studies Workshop and the Annual Roundtable for Engineering Entrepreneurship Research (REER) for useful comments and suggestions. Finally, I am indebted to Marina Agranov, Guillaume Frechette, Andrew Schotter and Ofer Setty for their support during my tenure at NYU.
منابع مشابه
The Entrepreneurial Spawning of Scientists and Engineers: Stars, Slugs, and the Small Firm Effect
Using data from a broad sample of US scientists and engineers, we examine the relationship between work experience in firms of different sizes and worker ability on decisions to enter entrepreneurship. We find that workers in small firms are far more likely than others to leave paid employment to found new ventures, and that prior experience in small firms predicts a number of positive performa...
متن کاملEntrepreneurship Education – Does It Matter?
This paper addresses an answer to the research question: does entrepreneurship education lead to establishment of new firms?. The research in the paper was based on a survey with a questionnaire and the questionnaire was sent to two different groups of respondents, a Respond group (who had completed an entrepreneurship education) and a Control group (who had not passed an entrepreneurship educa...
متن کاملDoes the Ability to Make a New Business Need More Risky Choices during Decisions? Evidences for the Neurocognitive Basis of Entrepreneurship
متن کامل
Forthcoming Small Business Economics
William J. Baumol is the 2003 winner of the International Award for Entrepreneurship and Small Business Research. Throughout his career Baumol has urged the profession to pay attention to the instrumental role of entrepreneurship in economic renewal and growth. At the same time he has insisted that economists continue to use their usual tool box when the purview of analysis is extended to entre...
متن کاملEntrepreneurship and Reforms in Developing Countries
We examine how institutional and policy reforms affect the relationship between entrepreneurship and growth. We perform Arellano-Bond GMM estimations on annual data (over the period 1990-2002) from a large group of developing countries and focus in particular on the interplay between policy and institutional reforms and entrepreneurship. We find that the joint effect of trade reform and entrepr...
متن کامل