The Returns to Entrepreneurship: Evidence from Matched Person-Firm Data

Mirjam Van Praag, Arvid Raknerud

    Research output: Working paperResearch

    Abstract

    Empirical studies show low pecuniary returns of switching from wage employment to entrepreneurship. We reconsider the pecuniary gains of this switching by employing a two-stage procedure, where the randomness in the timing of inheritance transfers is used as an exclusion restriction to identify causal effects. The model is estimated on data covering the whole Norwegian population of individuals matched to the entire population of firms established in the period 2002-2011. The results indicate that the average returns to entrepreneurship are significantly negative for individuals entering entrepreneurship through self-employment and modest, but significantly positive, for incorporated startups.
    Original languageEnglish
    Place of PublicationBonn
    PublisherIZA
    Number of pages29
    Publication statusPublished - 2017
    SeriesIZA Discussion Paper
    Number11018
    SeriesCentre for Economic Policy Research. Discussion Papers
    Number12330
    ISSN0265-8003

    Keywords

    • Returns to entrepreneurship
    • Earnings distribution
    • Matched person-firm data
    • Self-employment
    • Random effects probit model

    Cite this

    Van Praag, M., & Raknerud, A. (2017). The Returns to Entrepreneurship: Evidence from Matched Person-Firm Data. Bonn: IZA. IZA Discussion Paper, No. 11018, Centre for Economic Policy Research. Discussion Papers, No. 12330