Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework

Robin Douhan and Mirjam Praag

No 4211, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.

Keywords: entrepreneurship; ability; occupational choice; human capital; wage structure (search for similar items in EconPapers)
JEL-codes: I20 J24 J31 L26 (search for similar items in EconPapers)
Pages: 27 pages
Date: 2009-06
New Economics Papers: this item is included in nep-bec, nep-ent, nep-hrm and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework (2009)
Working Paper: Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework (2009)
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