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Being Independent is a Great Thing: Subjective Evaluations of Self-Employment and Hierarchy

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Author Info
Bruno Frey ()
Matthias Benz ()

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Abstract

One can be independent, or subject to decisions made by others. This paper empirically tests whether individuals attach an intrinsic value to the institutional difference between independence and hierarchy. Taking self-employment as an important case of independence, it is shown that the self-employed derive more utility from their work than people employed by an organization, irrespective of income gained or hours worked. This is evidence for procedural utility: people do not only value outcomes, but also the conditions and processes leading to these outcomes.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 959.

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Date of creation: 2003
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Handle: RePEc:ces:ceswps:_959

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Related research
Keywords: procedural utility; institutions; hierarchiy; self-employment; job satisfaction;

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Find related papers by JEL classification:
D00 - Microeconomics - - General - - - General
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
M54 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Labor Management

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Djankov, Simeon & La Porta, Rafael & López-de-Silanes, Florencio & Shleifer, Andrei, 2001. "The Regulation of Entry," CEPR Discussion Papers 2953, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  2. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September. [Downloadable!] (restricted)
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  3. Konow, James, 2001. "Fair and square: the four sides of distributive justice," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 137-164, October. [Downloadable!] (restricted)
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  5. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May. [Downloadable!] (restricted)
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  9. Marc Le Menestrel, 2001. "A Process Approach to the Utility for Gambling," Economics Working Papers 570, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  13. Clark, Andrew E & Georgellis, Yannis & Sanfey, Peter, 2001. "Scarring: The Psychological Impact of Past Unemployment," Economica, London School of Economics and Political Science, vol. 68(270), pages 221-41, May. [Downloadable!] (restricted)
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  14. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July. [Downloadable!] (restricted)
  15. Clark, Andrew E., 2001. "What really matters in a job? Hedonic measurement using quit data," Labour Economics, Elsevier, vol. 8(2), pages 223-242, May. [Downloadable!] (restricted)
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  17. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2001. "Preferences over Inflation and Unemployment: Evidence from Surveys of Happiness," American Economic Review, American Economic Association, vol. 91(1), pages 335-341, March. [Downloadable!] (restricted)
  18. Bruno Frey & Alois Stutzer, 2002. "Beyond Outcomes: Measuring Procedural Utility," Berkeley Olin Program in Law & Economics, Working Paper Series 1062, Berkeley Olin Program in Law & Economics. [Downloadable!]
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  19. Rafael Lalive, 2007. "Do Wages Compensate for Workplace Disamenities?," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 53(3), pages 273-298.
  20. Oi, Walter Y. & Idson, Todd L., 1999. "Firm size and wages," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 33, pages 2165-2214 Elsevier. [Downloadable!] (restricted)
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  22. Kahneman, Daniel & Knetsch, Jack L & Thaler, Richard, 1986. "Fairness as a Constraint on Profit Seeking: Entitlements in the Market," American Economic Review, American Economic Association, vol. 76(4), pages 728-41, September. [Downloadable!] (restricted)
  23. Frey, Bruno S. & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  24. Robert J. Shiller & Maxim Boycko & Vladimir Korobov, 1991. "Popular Attitudes Towards Free Markets: The Soviet Union and the United States Compared," NBER Working Papers 3453, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  26. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June. [Downloadable!] (restricted)
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    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December. [Downloadable!] (restricted)
    Other versions:
  2. Edvard Johansson, 2004. "Job Satisfaction in Finland - Some results from the European Community Household Panel 1996-2001," Discussion Papers 958, The Research Institute of the Finnish Economy. [Downloadable!]
  3. Jörn Block & Philipp Sandner, 2009. "Necessity and Opportunity Entrepreneurs and Their Duration in Self-employment: Evidence from German Micro Data," Journal of Industry, Competition and Trade, Springer, vol. 9(2), pages 117-137, June. [Downloadable!] (restricted)
    Other versions:
  4. Matthias Benz, . "Entrepreneurship as a non-profit-seeking activity," IEW - Working Papers iewwp243, Institute for Empirical Research in Economics - IEW. [Downloadable!]
  5. Block, Joern & Wagner, Marcus, 2006. "Necessity and Opportunity Entrepreneurs in Germany: Characteristics and Earnings Differentials," MPRA Paper 610, University Library of Munich, Germany. [Downloadable!]
  6. Bögenhold, Dieter & Fachinger, Uwe, 2004. "Struktureller Wandel selbständiger Erwerbsarbeit: Analysen auf der Grundlage der Scientific Use Files der Mikrozensen," MPRA Paper 1125, University Library of Munich, Germany. [Downloadable!]
  7. Nzinga Broussard & Ralph Chami & Gregory Hess, 2003. "(Why) Do Self-Employed Parents Have More Children?," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  8. William J. Baumol, 2007. "Returns in Cost Diseased Markets with Psychic Benefits: Two Apparently Conflicting Models of Equilibrium," Working Papers 07-16, Utrecht School of Economics. [Downloadable!]
  9. Robert A. J. Dur & Amihai Glazer, 2005. "The Desire for Impact," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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