Stairway to Heaven? Selection into Entrepreneurship, Income Mobility and Firm Performance

Jarkko Harju, Toni Juuti and Tuomas Matikka

No 168, Working Papers from VATT Institute for Economic Research

Abstract: Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses compared to others. There is no similar selection based on parental income, but more than half of new entrepreneurs have entrepreneurial parents. Individual income gains from entrepreneurship are similar across different background characteristics, but parental entrepreneurship and personal income are positively linked to key firm-level outcomes such as productivity and job creation. This highlights the importance of the intergenerational transmission of entrepreneurial skills and suggests that businesses established by high-income individuals generate largest positive spillovers.

Keywords: entrepreneurship; income mobility; inequality; productivity; Social security; taxation and inequality; Business taxation and regulation; L26; J24; J3; fi=Tulonjako ja eriarvoisuus|sv=Inkomstfördelning och ojämlikhet|en=Income distribution and inequality| (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-bec, nep-ent, nep-lma and nep-sbm
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https://www.doria.fi/handle/10024/189874

Related works:
Working Paper: Stairway to Heaven? Selection into Entrepreneurship, Income Mobility and Firm Performance (2024)
Working Paper: Stairway to Heaven? Selection into Entrepreneurship, Income Mobility and Firm Performance (2023)
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