Smart and Illicit: Who Becomes an Entrepreneur and Does it Pay?

Ross Levine () and Yona Rubinstein

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We disaggregate the self-employed into incorporated and unincorporated to distinguish between "entrepreneurs" and other business owners. The incorporated self-employed have a distinct combination of cognitive, noncognitive, and family traits. Besides coming from higher-income families with better-educated mothers, the incorporated - as teenagers - scored higher on learning aptitude tests, had greater self-esteem, and engaged in more aggressive, illicit, risk-taking activities. The combination of "smarts" and "aggressive/illicit/risk-taking" tendencies as a youth accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to a large literature, we also find that entrepreneurs earn much more per hour than their salaried counterparts.

Keywords: Self-employment; Occupational choice; Compensation; Firm organization; Corporate finance; Cognitive and Noncognitive traits (search for similar items in EconPapers)
JEL-codes: G32 J24 J3 L26 (search for similar items in EconPapers)
Date: 2013-08
New Economics Papers: this item is included in nep-bec and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

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Working Paper: Smart and illicit: who becomes an entrepreneur and does it pay? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1237

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