Becoming an Entrepreneur

Hugo Ñopo and Patricio Valenzuela

No 2716, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few “superstar winners.” Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch.

Keywords: difference-in-differences; non-parametric matching; micro-enterprises (search for similar items in EconPapers)
JEL-codes: J16 J31 J41 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2007-03
New Economics Papers: this item is included in nep-bec and nep-ent
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Becoming an Entrepreneur (2007)
Working Paper: Becoming an Entrepreneur (2007)
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