TY - JOUR
T1 - The Entrepreneurial Earnings Puzzle
T2 - Mismeasurement or Real?
AU - Chen, Jing
AU - Åstebro, Thomas
PY - 2014/1
Y1 - 2014/1
N2 - A review of recent evidence on relative earnings from entrepreneurship versus wage work presents a puzzle: why do individuals become entrepreneurs when entrepreneurs on average apparently earn less than employees? After considering several potential explanations, we empirically analyze one: income underreporting by entrepreneurs. Using a nationwide panel survey representing U.S. households over 15 years, we estimate that entrepreneurs on average earn 4% less per year than employees. However, after correcting for income underreporting, the mean financial gain to entrepreneurship is positive and large, greater than 42%. However, we show that this estimate is built on some unpalatable model assumptions.
AB - A review of recent evidence on relative earnings from entrepreneurship versus wage work presents a puzzle: why do individuals become entrepreneurs when entrepreneurs on average apparently earn less than employees? After considering several potential explanations, we empirically analyze one: income underreporting by entrepreneurs. Using a nationwide panel survey representing U.S. households over 15 years, we estimate that entrepreneurs on average earn 4% less per year than employees. However, after correcting for income underreporting, the mean financial gain to entrepreneurship is positive and large, greater than 42%. However, we show that this estimate is built on some unpalatable model assumptions.
KW - Entrepreneurship
KW - Returns
KW - Income underreporting
U2 - 10.1016/j.jbusvent.2013.04.003
DO - 10.1016/j.jbusvent.2013.04.003
M3 - Journal article
VL - 29
SP - 88
EP - 105
JO - Journal of Business Venturing
JF - Journal of Business Venturing
SN - 0883-9026
IS - 1
ER -