Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework

Robin Douhan () and Mirjam van Praag
Additional contact information
Robin Douhan: Research Institute of Industrial Economics (IFN) and Uppsala University

No 09-055/3, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.

Keywords: Entrepreneurship; Ability; Occupational Choice; Human Capital; Wage Structure (search for similar items in EconPapers)
JEL-codes: L26 I20 J24 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-ent, nep-hrm and nep-lab
Date: 2009-06-29, Revised 2009-07-23

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Related works:
Working Paper: Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework (2009)
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Persistent link: http://EconPapers.repec.org/RePEc:dgr:uvatin:20090055

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