“Status” concerns and self-employment transitions

Alpaslan Akay () and Levent Yilmaz ()
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Alpaslan Akay: University of Gothenburg and Bahçeşehir University
Levent Yilmaz: University of Salzburg, Department of Business

Small Business Economics, 2025, vol. 65, issue 4, No 3, 2113-2142

Abstract: Abstract This paper investigates whether individuals’ relative (status or positional) concerns are associated with their transitions from paid employment or inactivity to self-employment. The conjecture is that stress and anxiety arising from socio-economic comparisons may be motivating factors for individuals to establish their own businesses. We examine this using the Socio-Economic Panel (SOEP) dataset, a long panel spanning three decades. Employing fixed-effects panel model specifications, we find that an increase in the income and job prestige of comparable others is associated with a higher probability of transitioning from paid employment or inactivity to self-employment. On average, a 10% rise in the income or job prestige of comparable others corresponds to a 7–10% higher likelihood of transitioning to self-employment. These findings are robust across various checks, including estimators, income definitions, and reference groups. The paper also explores catalysing factors such as risk-taking, skills, and autonomy, which moderate the relationship between relative concerns and the transition to self-employment.

Keywords: Relative income; Job prestige; Positional behaviour; Self-employment; Entrepreneurship (search for similar items in EconPapers)
JEL-codes: C90 D63 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s11187-025-01051-0

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