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The returns to entrepreneurship: Evidence from matched person-firm data

Arvid Raknerud and Mirjam Praag

No 12330, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Empirical studies show low pecuniary returns of switching from wage employment to entrepreneurship. We reconsider the pecuniary gains of this switching by employing a two-stage procedure, where the randomness in the timing of inheritance transfers is used as an exclusion restriction to identify causal effects. The model is estimated on data covering the whole Norwegian population of individuals matched to the entire population of firms established in the period 2002-2011. The results indicate that the average returns to entrepreneurship are significantly negative for individuals entering entrepreneurship through self-employment and modest, but significantly positive, for incorporated startups.

Keywords: Earnings distribution; Matched person- firm data; Random effects probit model; Returns to entrepreneurship; Self-employment (search for similar items in EconPapers)
JEL-codes: C23 G32 J31 L26 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ino and nep-sbm
Date: 2017-09
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Working Paper: The Returns to Entrepreneurship: Evidence from Matched Person-Firm Data (2017) Downloads
Working Paper: The Returns to Entrepreneurship: Evidence from Matched Person-firm Data (2017) Downloads
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