Compensating income variation in health and subjective well-being for the self-employed

Pankaj C. Patel, Mike G. Tsionas and Pejvak Oghazi

Journal of Business Research, 2023, vol. 160, issue C

Abstract: Complementing growing interest in entrepreneurship and well-being, we apply a conceptualization of compensating income variation (CIV) – how much extra income an individual would require offsetting the loss in subjective well-being from a unit decline in health – in health economics to entrepreneurship. We hypothesize and test the extent of the CIV among the self-employed and whether the CIV varies by sex and age. We use a Bayesian vector auto-regression model in the Household, Income, and Labour Dynamics in Australia (HILDA) Survey data. We find that the CIV for the self-employed (employed) was AUD 10,315 (AUD 6,873) annually for a unit decrease in subjective well-being. We do not find significant differences in the CIV among the self-employed by sex and age. The findings show that the self-employed requires higher compensatory income to accept poorer health.

Keywords: Compensating income variation; Self-employed; Sex; Age (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jbrese:v:160:y:2023:i:c:s014829632300173x

DOI: 10.1016/j.jbusres.2023.113815

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