Entrepreneurs and Output: Theory and Empirical Evidence with Spanish Data

Vicente Salas-Fumas (), J. Javier Sanchez-Asin () and David Storey ()
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Vicente Salas-Fumas: Faculty of Economics, University of Zaragota, Spain
J. Javier Sanchez-Asin: Faculty of Economics, University of Zaragota, Spain
David Storey: School of Business Management and Economics, University of Sussex, UK

SPRU Working Paper Series from SPRU - Science Policy Research Unit, University of Sussex Business School

Abstract: This paper extends the Lucas (1978) model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the self-employed. That is, an option to hire employees and so become self-employed with employees (SEWEs), or to be self-employed without employees (SEWNEs). We solve for the market equilibrium and examine the sensitivity of relative sizes of occupational groups, and of the level of productivity, to changes in the exogenous parameters. The results show that the positive (negative) association between number of SEWEs (SEWNEs) and productivity, observed in the Spanish data, can be explained, under certain conditions, as the result of cross-region and time differences in average skills. These findings point to the importance of distinguishing between SEWEs and SEWNEs in drawing valid conclusions concerning any link between entrepreneurship and economic development.

Keywords: Occupational choice; Self-employment; entrepreneurship; entrepreneural skills; Spanish economy (search for similar items in EconPapers)
JEL-codes: D24 J24 L26 (search for similar items in EconPapers)
Date: 2013-12
New Economics Papers: this item is included in nep-cse, nep-ent, nep-lma and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:sru:ssewps:2013-13

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