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Life satisfaction and self-employment: A matching approach

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  • Martin Binder

    ()

  • Alex Coad

    ()

Abstract

Despite lower incomes, the self-employed consistently report higher satisfaction with their jobs. But are self-employed individuals also happier, more satisfied with their lives as a whole? High job satisfaction might cause them to neglect other important domains of life, such that the fulfilling job crowds out other pleasures, leaving the individual on the whole not happier than others. Moreover, self-employment is often chosen to escape unemployment, not for the associated autonomy that seems to account for the high job satisfaction. We apply matching estimators that allow us to better take into account the above-mentioned considerations and construct an appropriate control group. Using the BHPS data set that comprises a large nationally representative sample of the British populace, we find that individuals who move from regular employment into self-employment experience an increase in life satisfaction (up to two years later), while individuals moving from unemployment to self-employment are not more satisfied than their counterparts moving from unemployment to regular employment. We argue that these groups correspond to "opportunity" and "necessity" entrepreneurship, respectively. These findings are robust with regard to different measures of subjective well-being as well as choice of matching variables, and also robustness exercises involving "simulated confounders".

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Bibliographic Info

Paper provided by Max Planck Institute of Economics, Evolutionary Economics Group in its series Papers on Economics and Evolution with number 2010-20.

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Date of creation: Dec 2010
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Handle: RePEc:esi:evopap:2010-20

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Keywords: self-employment; happiness; matching estimators; unemployment; BHPS; necessity entrepreneurship Length 26 pages;

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Citations

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Cited by:
  1. Alex Coad & Martin Binder, 2014. "Causal Linkages between Work and Life Satisfaction and Their Determinants in a Structural VAR Approach," Economics Working Paper Archive wp_809, Levy Economics Institute.
  2. Pfeffer, Jeffrey & DeVoe, Sanford E., 2012. "The Economic Evaluation of Time Organizational Causes and Individual Consequences," Research Papers 2123, Stanford University, Graduate School of Business.
  3. Cortés Aguilar Alexandra & Teresa Garcia-Muñoz & Ana I. Moro Egido, 2013. "Heterogeneous Self-employment and Subjective Well-Being. Evidence from Latin America," ThE Papers 13/05, Department of Economic Theory and Economic History of the University of Granada..
  4. Martin Binder & Tom Broekel, 2012. "Happiness No Matter the Cost? An Examination on How Efficiently Individuals Reach Their Happiness Levels," Journal of Happiness Studies, Springer, vol. 13(4), pages 621-645, August.
  5. Binder, Martin & Coad, Alex, 2013. "“I'm afraid I have bad news for you…” Estimating the impact of different health impairments on subjective well-being," Social Science & Medicine, Elsevier, vol. 87(C), pages 155-167.
  6. Nicolai Suppa, 2012. "Job Characteristics and Subjective Well-Being in Australia – A Capability Approach Perspective," Ruhr Economic Papers 0388, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
  7. Martin Binder & Felix Ward, 2011. "The Structure of Happiness: A Vector Autoregressive Approach," Papers on Economics and Evolution 2011-08, Max Planck Institute of Economics, Evolutionary Economics Group.

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