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Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data

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  • Vicente Salas-Fumás

    ()

  • J. Sanchez-Asin

    ()

  • David Storey

    ()

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    Abstract

    This paper extends the (Lucas, Bell J Econ 9:508–523, 1978 ) model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the self-employed. That is, an option to hire employees and so become self-employed with employees (SEWEs), or to be self-employed without employees (SEWNEs). We solve for the market equilibrium and examine the sensitivity of relative sizes of occupational groups, and of the level of productivity, to changes in the exogenous parameters. The results show that the positive (negative) association between number of SEWEs (SEWNEs) and productivity, observed in the Spanish data, can be explained, under certain conditions, as the result of cross-region and time differences in average skills. These findings point to the importance of distinguishing between SEWEs and SEWNEs in drawing valid conclusions concerning any link between entrepreneurship and economic development. Copyright The Author(s) 2014

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    Bibliographic Info

    Article provided by Spanish Economic Association in its journal SERIEs.

    Volume (Year): 5 (2014)
    Issue (Month): 1 (March)
    Pages: 1-24

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    Handle: RePEc:spr:series:v:5:y:2014:i:1:p:1-24

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    Related research

    Keywords: Occupational choice; Self-employment; Entrepreneurship; Entrepreneurial skills; Spanish economy; J24; L26; D24;

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    References

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    1. Sander Wennekers & André van Wennekers & Roy Thurik & Paul Reynolds, 2005. "Nascent Entrepreneurship and the Level of Economic Development," Small Business Economics, Springer, Springer, vol. 24(3), pages 293-309, 04.
    2. Sherwin Rosen, 1982. "Authority, Control, and the Distribution of Earnings," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 13(2), pages 311-323, Autumn.
    3. Audretsch, David B. & Keilbach, Max C. & Lehmann, Erik E., 2006. "Entrepreneurship and Economic Growth," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780195183511, October.
    4. Garicano, Luis & Lelarge, Claire & Van Reenen, John, 2013. "Firm Size Distortions and the Productivity Distribution: Evidence from France," IZA Discussion Papers 7241, Institute for the Study of Labor (IZA).
    5. Baumol, William J, 1990. "Entrepreneurship: Productive, Unproductive, and Destructive," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 98(5), pages 893-921, October.
    6. Adriaan J. van Stel & David J. Storey, 2004. "The link between firm births and job creation: Is there a Upas Tree effect?," Papers on Entrepreneurship, Growth and Public Policy, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group 2004-33, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    7. Pol Antràs & Luis Garicano & Esteban Rossi-Hansberg, 2005. "Offshoring in a Knowledge Economy," NBER Working Papers 11094, National Bureau of Economic Research, Inc.
    8. Dawson, Christopher & Henley, Andrew & Latreille, Paul L., 2009. "Why Do Individuals Choose Self-Employment?," IZA Discussion Papers 3974, Institute for the Study of Labor (IZA).
    9. Luis Garicano & Esteban Rossi-Hansberg, 2005. "Organization and Inequality in a Knowledge Economy," NBER Working Papers 11458, National Bureau of Economic Research, Inc.
    10. Thomas Dunn & Douglas Holtz-Eakin, 1996. "Financial Capital, Human Capital, and the Transition to Self-Employment:Evidence from Intergenerational Links," NBER Working Papers 5622, National Bureau of Economic Research, Inc.
    11. Simon C. Parker & Martin T. Robson, 2004. "Explaining International Variations in Self-Employment: Evidence from a Panel of OECD Countries," Southern Economic Journal, Southern Economic Association, vol. 71(2), pages 287-301, October.
    12. Sobel, Russell S., 2008. "Testing Baumol: Institutional quality and the productivity of entrepreneurship," Journal of Business Venturing, Elsevier, vol. 23(6), pages 641-655, November.
    13. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, American Economic Association, vol. 79(3), pages 519-35, June.
    14. Dunn, Thomas & Holtz-Eakin, Douglas, 2000. "Financial Capital, Human Capital, and the Transition to Self-Employment: Evidence from Intergenerational Links," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 18(2), pages 282-305, April.
    15. Carrasco, R., 1997. "Transitions to and from Self-Employment in Spain: An Empirical Analysis," Papers, Centro de Estudios Monetarios Y Financieros- 9710, Centro de Estudios Monetarios Y Financieros-.
    16. POSCHKE, Markus, 2011. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," Cahiers de recherche, Centre interuniversitaire de recherche en économie quantitative, CIREQ 08-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
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    18. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, Econometric Society, vol. 60(5), pages 1127-50, September.
    19. Luis Garicano, 2000. "Hierarchies and the Organization of Knowledge in Production," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(5), pages 874-904, October.
    20. Eeckhout, Jan & Jovanovic, Boyan, 2012. "Occupational choice and development," Journal of Economic Theory, Elsevier, Elsevier, vol. 147(2), pages 657-683.
    21. Calvo, Guillermo A & Wellisz, Stanislaw, 1979. "Hierarchy, Ability, and Income Distribution," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(5), pages 991-1010, October.
    22. repec:hrv:faseco:4784031 is not listed on IDEAS
    23. Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 97(4), pages 808-27, August.
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