Smart and illicit: who becomes an entrepreneur and does it pay?

Ross Levine () and Yona Rubinstein

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We disaggregate the self-employed into incorporated and unincorporated to distinguish between “entrepreneurs” and other business owners. The incorporated self-employed have a distinct combination of cognitive, noncognitive, and family traits. Besides coming from higher-income families with better-educated mothers, the incorporated - as teenagers - scored higher on learning aptitude tests, had greater self-esteem, and engaged in more aggressive, illicit, risk-taking activities. The combination of “smarts” and “aggressive/illicit/risk-taking” tendencies as a youth accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to a large literature, we also find that entrepreneurs earn much more per hour than their salaried counterparts.

Keywords: self-employment; occupational choice; compensation; firm organization; corporate finance; cognitive and noncognitive traits (search for similar items in EconPapers)
JEL-codes: G32 J24 J30 L20 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2013-08-28
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http://eprints.lse.ac.uk/121781/ Open access version. (application/pdf)

Related works:
Working Paper: Smart and Illicit: Who Becomes an Entrepreneur and Does it Pay? (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:121781

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