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The entrepreneurship premium

Author

Listed:
  • Boyan Jovanovic

    (NYU)

Abstract

Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents. The paper also shows that in an otherwise standard occupational choice setting, the entrepreneurship premium rises with entrepreneurial scarcity and falls with their span of control. Finally, liquidity constraints on startups raise the entrepreneurship premium by lowering the equilibrium wage.

Suggested Citation

  • Boyan Jovanovic, 2019. "The entrepreneurship premium," Small Business Economics, Springer, vol. 53(3), pages 555-568, October.
    • Handle: RePEc:kap:sbusec:v:53:y:2019:i:3:d:10.1007_s11187-019-00234-w
    DOI: 10.1007/s11187-019-00234-w
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    Cited by:

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    2. Michele Dell'Era & Luca David Opromolla & Luís Santos‐Pinto, 2023. "Can optimism solve the entrepreneurial earnings puzzle?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 125(1), pages 139-169, January.
    3. Zoltan J. Acs & Abraham K. Song & László Szerb & David B. Audretsch & Éva Komlósi, 2021. "The evolution of the global digital platform economy: 1971–2021," Small Business Economics, Springer, vol. 57(4), pages 1629-1659, December.
    4. Björn Hårsman & Lars-Göran Mattsson, 2021. "Analyzing the returns to entrepreneurship by a modified Lazear model," Small Business Economics, Springer, vol. 57(4), pages 1875-1892, December.
    5. Zoltan J. Acs, 2023. "The global digital platform economy and the region," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 70(1), pages 101-133, February.
    6. Aleksandra Gawel & Timo Toikko, 2021. "Trust in European Institutions in Explaining the Entrepreneurship in European Union Countries," Social Sciences, MDPI, vol. 10(6), pages 1-16, May.
    7. Holmberg, Johan, 2021. "Earnings and Employment Dynamics: Capturing Cyclicality using Mixed Frequency Data," Umeå Economic Studies 991, Umeå University, Department of Economics.

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    Keywords

    Entrepreneurship; Profit; Wage;
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