Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?

Ross Levine () and Yona Rubinstein

No 19276, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We disaggregate the self-employed into incorporated and unincorporated to distinguish between "entrepreneurs" and other business owners. We show that the incorporated self-employed and their businesses engage in activities that demand comparatively strong nonroutine cognitive abilities, while the unincorporated and their firms perform tasks demanding relatively strong manual skills. The incorporated selfemployed have distinct cognitive and noncognitive traits. Besides tending to be white, male, and come from higher-income families, the incorporated—as teenagers—typically scored higher on learning aptitude tests, had greater self-esteem, and engaged in more disruptive, illicit activities. The combination of "smart" and "illicit" tendencies as youths accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to past research, we find that entrepreneurs earn more per hour and work more hours than their salaried and unincorporated counterparts.

JEL-codes: G32 J24 J3 L26 (search for similar items in EconPapers)
Date: 2013-08
Note: CF LS
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Published as Ross Levine & Yona Rubinstein, 2017. "Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 963-1018.

Downloads: (external link)
http://www.nber.org/papers/w19276.pdf (application/pdf)

Related works:
Journal Article: Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More? (2017)
Working Paper: Smart and illicit: who becomes an entrepreneur and do they earn more? (2017)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19276

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19276

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().