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

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Tinbergen Institute Discussion Paper ; No. 17-089/VII

Classification and Topics

• Classification: Wirtschaft ; Entrepreneurship ; Single Equation Models; Single Variables: Panel Data Models; Spatio-temporal Models ; Wage Level and Structure; Wage Differentials ; Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
• Subject: Returns to entrepreneurship ; Earnings distribution ; Matched person-firm data ; Self-employment ; Random effects probit model

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): van Praag, Mirjam (C.M.) ; Raknerud, Arvid
• Event: Veröffentlichung
• (who): Tinbergen Institute
• (where): Amsterdam and Rotterdam
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/177657
• Last update: 10.03.2025, 11:44 AM CET