Scarred by Failure?

Jeroen Mahieu, Francesca Melillo, Toke Reichstein

Research output: Contribution to conferencePaperResearchpeer-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: 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. 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. 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.
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: 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. 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. 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.

Conference

ConferenceDRUID Academy Conference 2018
LocationUniversity of Southern Denmark
CountryDenmark
CityOdense
Period17/01/201819/01/2018
Internet address

Keywords

  • Entrepreneurship
  • Returns
  • Matching

Cite this

Mahieu, J., Melillo, F., & Reichstein, T. (2018). Scarred by Failure?. Paper presented at DRUID Academy Conference 2018, Odense, Denmark.
Mahieu, Jeroen ; Melillo, Francesca ; Reichstein, Toke. / Scarred by Failure?. Paper presented at DRUID Academy Conference 2018, Odense, Denmark.38 p.
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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: 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. 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. 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 resultsare consistent with theories of adverse selection in the labour market.",
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Mahieu, J, Melillo, F & Reichstein, T 2018, 'Scarred by Failure?' Paper presented at, Odense, Denmark, 17/01/2018 - 19/01/2018, .

Scarred by Failure? / Mahieu, Jeroen; Melillo, Francesca; Reichstein, Toke.

2018. Paper presented at DRUID Academy Conference 2018, Odense, Denmark.

Research output: Contribution to conferencePaperResearchpeer-review

TY - CONF

T1 - Scarred by Failure?

AU - Mahieu,Jeroen

AU - Melillo,Francesca

AU - Reichstein,Toke

PY - 2018

Y1 - 2018

N2 - 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: 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. 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. 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 resultsare consistent with theories of adverse selection in the labour market.

AB - 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: 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. 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. 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 resultsare consistent with theories of adverse selection in the labour market.

KW - Entrepreneurship

KW - Returns

KW - Matching

KW - Entrepreneurship

KW - Returns

KW - Matching

M3 - Paper

ER -

Mahieu J, Melillo F, Reichstein T. Scarred by Failure?. 2018. Paper presented at DRUID Academy Conference 2018, Odense, Denmark.