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The Effect of Relative Standing on Considerations about Self-Employment

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  • Stefan Schneck

Abstract

This paper uses unique German data to examine the effects of the relative standing on the individual propensity to become self-employed in the next two years. The results suggest that the relationship between relative wage positions and propensity to become self-employed is U-shaped. This is interpreted as evidence that low status translates into entrepreneurial motivation for workers in low relative wage positions. Employees with high relative standing, in turn, seem to be more concerned about the lack of future career prospects in paid employment and consider self-employment as a next step on the individual career ladder.

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File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.391496.de/diw_sp0426.pdf
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Bibliographic Info

Paper provided by DIW Berlin, The German Socio-Economic Panel (SOEP) in its series SOEPpapers on Multidisciplinary Panel Data Research with number 426.

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Length: 37 p.
Date of creation: 2011
Date of revision:
Handle: RePEc:diw:diwsop:diw_sp426

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Keywords: Relative wage position; status; self-employment;

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References

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  1. Gert G. Wagner & Joachim R. Frick & Jürgen Schupp, 2007. "The German Socio-Economic Panel Study (SOEP): Scope, Evolution and Enhancements," SOEPpapers on Multidisciplinary Panel Data Research 1, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Guy Mayraz & Gert G. Wagner & Jürgen Schupp, 2009. "Life Satisfaction and Relative Income: Perceptions and Evidence," SOEPpapers on Multidisciplinary Panel Data Research 214, DIW Berlin, The German Socio-Economic Panel (SOEP).
  3. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-41, May.
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  7. Christian Pfeifer & Stefan Schneck, 2010. "Relative Wage Positions and Quit Behavior: New Evidence from Linked Employer-Employee Data," Working Paper Series in Economics 163, University of Lüneburg, Institute of Economics.
  8. AndrewE. Clark & Nicolai Kristensen & Niels Westergård-Nielsen, 2009. "Job Satisfaction and Co-worker Wages: Status or Signal?," Economic Journal, Royal Economic Society, vol. 119(536), pages 430-447, 03.
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  13. Brown, Gordon D. A. & Gardner, Jonathan & Oswald, Andrew J. & Qian, Jing, 2005. "Does Wage Rank Affect Employees' Wellbeing?," IZA Discussion Papers 1505, Institute for the Study of Labor (IZA).
  14. Clark, Andrew E. & Frijters, Paul & Shields, Michael A., 2007. "Relative Income, Happiness and Utility: An Explanation for the Easterlin Paradox and Other Puzzles," IZA Discussion Papers 2840, Institute for the Study of Labor (IZA).
  15. Hirschman, Albert O & Rothschild, Michael, 1973. "The Changing Tolerance for Income Inequality in the Course of Economic Development; with a Mathematical Appendix," The Quarterly Journal of Economics, MIT Press, vol. 87(4), pages 544-66, November.
  16. Hamermesh, Daniel S, 1975. "Interdependence in the Labour Market," Economica, London School of Economics and Political Science, vol. 42(168), pages 420-29, November.
  17. Manoj Atolia & Kislaya Prasad, 2011. "Relative Wealth Concerns and Entrepreneurship," Economica, London School of Economics and Political Science, vol. 78(310), pages 294-316, 04.
  18. Boden, Richard Jr., 1996. "Gender and self-employment selection: An empirical assessment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(6), pages 671-682.
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