Arbeitspapier
If you are so smart, why aren't you an Entrepreneur?
How valuable are cognitive and social abilities for entrepreneurs’ incomes as compared to employees? We answer three questions: (1) To what extent does a composite measure of ability affect an entrepreneur's earnings relative to employees? (2) Do different cognitive abilities (e.g. math ability, language ability) and social ability affect earnings of entrepreneurs and employees differently?, and (3) Does the balance in these measured ability levels affect an individual's earnings? Our individual fixed-effects estimates of the differential returns to ability for spells in entrepreneurship versus wage employment account for selectivity into entrepreneurial positions as determined by fixed individual characteristics. General ability has a stronger impact on entrepreneurial incomes than on wages. Entrepreneurs and employees benefit from different sets of specific abilities: Language and clerical abilities have a stronger impact on wages, whereas mathematical, social and technical ability affect entrepreneurial incomes more strongly. The balance in the various kinds of ability also generates a higher income, but only for entrepreneurs: This finding supports Lazear's Jack-of-all-Trades theory.
- Language
-
Englisch
- Bibliographic citation
-
Series: Tinbergen Institute Discussion Paper ; No. 08-073/3
- Classification
-
Wirtschaft
Labor Demand
Human Capital; Skills; Occupational Choice; Labor Productivity
Wage Level and Structure; Wage Differentials
Professional Labor Markets; Occupational Licensing
New Firms; Startups
- Subject
-
(Non-)Cognitive abilities
intelligence
earnings
entrepreneur(ship)
wage employment
income differentials
Berufswahl
Entrepreneurship-Ansatz
Arbeitskräfte
Soziale Kompetenz
Kognition
Erwerbsverlauf
Einkommen
USA
- Event
-
Geistige Schöpfung
- (who)
-
Hartog, Joop
van Praag, Mirjam
van der Sluis, Justin
- Event
-
Veröffentlichung
- (who)
-
Tinbergen Institute
- (where)
-
Amsterdam and Rotterdam
- (when)
-
2008
- Handle
- Last update
- 10.03.2025, 11:44 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Hartog, Joop
- van Praag, Mirjam
- van der Sluis, Justin
- Tinbergen Institute
Time of origin
- 2008
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