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An Empirical Study of the Transition from Paid Work to Self-Employment

S. Ramakrishna Velamuri and S. Venkataraman
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S. Venkataraman: University of Virginia

Journal of Entrepreneurial Finance, 2005, vol. 10, issue 1, 1-16

Abstract: We explore the transition from paid work to self-employment using three explanatory variables: paid income, predicted income, and income for ability. We find no linear relationship between the three variables and the self-employment transition. We then test for curvilinear relationships. We find that individuals with low incomes are more likely to take up self-employment. Further, income for ability is the strongest predictor of the transition to self-employment. The relationship between ability and self-employment is U-shaped: very low ability and very high ability individuals are more likely to take up self-employment.

Keywords: Self Employment; Labor Demand (search for similar items in EconPapers)
JEL-codes: J23 M13 (search for similar items in EconPapers)
Date: 2005
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