Prior Wage and the Returns to Entrepreneurship

Jeroen Mahieu; Francesca Melillo; Toke Reichstein

doi:10.5465/AMBPP.2018.110

Prior Wage and the Returns to Entrepreneurship

Jeroen Mahieu, Francesca Melillo, Toke Reichstein

Department of Strategy and Innovation

Catholic University of Leuven

Research output: Chapter in Book/Report/Conference proceeding › Conference abstract in proceedings › Research › peer-review

Abstract

Are failed entrepreneurs penalized in the labour market? The answer is yes under certain conditions. Using a novel dataset of matched entrepreneurs and employees in Belgium, we show that: (i) on average, entrepreneurs returning to the labour market after a business failure are penalized, but this effect is most pronounced for those coming from the higher echelons of the wage distribution, and absent for those who earned relatively little before entering self-employment. (ii) the penalty is only present for entrepreneurs who fail quickly: entrepreneurs returning to the labour market after 5 or more years do not get penalized. (iii) entrepreneurs who fail fast and move to a new employer limit the wage penalty by changing industry compared to the industry they were venturing in. These results are consistent with theories of adverse selection in the labour market.

Original language	English
Title of host publication	Proceedings of the Seventy-eighth Annual Meeting of the Academy of Management
Editors	Guclu Atinc
Number of pages	6
Place of Publication	Briar Cliff Manor, NY
Publisher	Academy of Management
Publication date	2018
Article number	110
DOIs	https://doi.org/10.5465/AMBPP.2018.110
Publication status	Published - 2018
Event	The Academy of Management Annual Meeting 2018: Improving Lives - Chicago, United States Duration: 10 Aug 2018 → 14 Aug 2018 Conference number: 78 http://aom.org/annualmeeting/

Conference

Conference	The Academy of Management Annual Meeting 2018
Number	78
Country/Territory	United States
City	Chicago
Period	10/08/2018 → 14/08/2018
Internet address	http://aom.org/annualmeeting/

Series	Academy of Management Proceedings
ISSN	2151-6561

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Cite this

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title = "Prior Wage and the Returns to Entrepreneurship",

abstract = "Are failed entrepreneurs penalized in the labour market? The answer is yes under certain conditions. Using a novel dataset of matched entrepreneurs and employees in Belgium, we show that: (i) on average, entrepreneurs returning to the labour market after a business failure are penalized, but this effect is most pronounced for those coming from the higher echelons of the wage distribution, and absent for those who earned relatively little before entering self-employment. (ii) the penalty is only present for entrepreneurs who fail quickly: entrepreneurs returning to the labour market after 5 or more years do not get penalized. (iii) entrepreneurs who fail fast and move to a new employer limit the wage penalty by changing industry compared to the industry they were venturing in. These results are consistent with theories of adverse selection in the labour market.",

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Mahieu, J, Melillo, F & Reichstein, T 2018, Prior Wage and the Returns to Entrepreneurship. in G Atinc (ed.), Proceedings of the Seventy-eighth Annual Meeting of the Academy of Management., 110, Academy of Management, Briar Cliff Manor, NY, Academy of Management Proceedings, The Academy of Management Annual Meeting 2018, Chicago, Illinois, United States, 10/08/2018. https://doi.org/10.5465/AMBPP.2018.110

Prior Wage and the Returns to Entrepreneurship. / Mahieu, Jeroen; Melillo, Francesca; Reichstein, Toke.
Proceedings of the Seventy-eighth Annual Meeting of the Academy of Management. ed. / Guclu Atinc. Briar Cliff Manor, NY: Academy of Management, 2018. 110 (Academy of Management Proceedings).

Research output: Chapter in Book/Report/Conference proceeding › Conference abstract in proceedings › Research › peer-review

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