Scarred by Failure?

Jeroen Mahieu, Francesca Melillo, Toke Reichstein

Research output: Contribution to conferencePaperResearchpeer-review


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.
Original languageEnglish
Publication date2018
Number of pages38
Publication statusPublished - 2018
EventDRUID Academy Conference 2018 - University of Southern Denmark, Odense, Denmark
Duration: 17 Jan 201819 Jan 2018


ConferenceDRUID Academy Conference 2018
LocationUniversity of Southern Denmark
Internet address


  • Entrepreneurship
  • Returns
  • Matching

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