Can working conditions explain the return-to-entrepreneurship puzzle?

Daniel S. J. Lechmann

No 86, Discussion Papers from Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics

Abstract: Most self-employed would apparently earn higher earnings if they were working in paid employment. One explanation for this 'return-to-entrepreneur-ship puzzle' could be that entrepreneurship entails substantial non-monetary bene-fits, such as autonomy, flexibility, and task variety. Utilizing German data and a de-composition analysis, this study examines the contribution of such working condi-tions to the observed earnings differential between self-employment and paid em-ployment. The results imply that working conditions differences do not contribute to resolve the return-to-entrepreneurship puzzle. Rather, (mis-)measurement of earnings seems to be an issue.

Keywords: compensating differentials; Germany; returns to entrepreneurship; self-employment; working conditions (search for similar items in EconPapers)
JEL-codes: J23 J31 J81 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cwa, nep-lab and nep-lma
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:faulre:86

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