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When is your experience valuable? Occupation-industry transitions and self-employment success

Sierdjan Koster () and Martin Andersson ()
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Sierdjan Koster: University of Groningen

Journal of Evolutionary Economics, 2018, vol. 28, issue 2, 265-286

Abstract: Abstract The literature on employee spinoffs has, for a long time, stressed the importance of industry-specific skills and experiences in explaining the success of new firms. We argue that employees also develop skills that are associated with their occupation within an industry, and that success as an entrepreneur, therefore, is also contingent on the relation between the entrepreneurs’ previous occupation and the industry in which they operate as self-employed. Using matched employer-employee data, we develop a measure, occupational spin-offs, that accounts for this relation. An occupational spin-off is defined as a start-up in the most common industry, given the previous occupation of the founder. We then show that entrepreneurs starting occupational spinoffs enjoy above average income from self-employment and have longer spells as business owners.

Keywords: Entrepreneurship; Self-employment; Occupational choice; Human capital; Skills; Spin-offs; Experience; L26; J24; J62; J23 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:spr:joevec:v:28:y:2018:i:2:d:10.1007_s00191-017-0528-2