Successful Entrepreneurs Come from the Top of the Earned Income Distribution

Niklas Garnadt (), Lena Füner (), Konrad Stahl () and Joacim Tåg ()
Additional contact information
Lena Füner: Centre for European Economic Research (ZEW), TUM, and IAB
Konrad Stahl: University of Mannheim, CEPR, CESifo and ZEW
Joacim Tåg: Research Institute of Industrial Economics (IFN), Postal: Stockholm, Sweden, and Hanken School of Economics, Helsinki, Finland, https://www.ifn.se/en/researchers/ifn-researcher/joacim-tag/

No 1529, Working Paper Series from Research Institute of Industrial Economics

Abstract: Identifying high growth startups ex-ante and fostering their success is an important policy challenge. Using Swedish registry data, we show that previous labor market earnings of entrepreneurs is a simple observable that is strongly correlated with entrepreneurship success. Entrepreneurs from the top decile of income from dependent employment are four times more likely to succeed than those from the lowest decile. Their firms are larger and more productive from the outset, and this effect intensifies over time. This correlation is virtually unaffected by variations in the entrepreneurs’ personal traits. It does also not vary across the business cycle.

Keywords: Entrepreneurship; High-growth startups; Labor income; Unemployment (search for similar items in EconPapers)
JEL-codes: J24 L26 M13 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2025-08-05
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:1529

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