Stars and Misfits: Self-Employment and Labor Market Frictions

Thomas Åsterbro, Jing Chen, Peter Thompson

    Research output: Contribution to journalJournal articlepeer-review

    Abstract

    Recent evidence has shown that entrants into self-employment are disproportionately drawn from the tails of the earnings and ability distributions. This observation is explained by a multitask model of occupational choice in which frictions in the labor market induce mismatches between firms and workers, and misassignment of workers to tasks. The model also yields distinctive predictions relating prior work histories to earnings and to the probability of entry into self-employment. These predictions are tested with the Korean Labor and Income Panel Study, from which we find considerable support for the model.
    Original languageEnglish
    JournalManagement Science
    Volume57
    Issue number11
    Pages (from-to)1999–2017
    ISSN0025-1909
    DOIs
    Publication statusPublished - 2011

    Keywords

    • Entrepreneurship
    • Self-Employment
    • Jack-of-all-Trades
    • Skill Complementarity

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