A consumption-based measure of the monetary rewards to entrepreneurship
AbstractRecent findings by Hamilton (Journal of Political Economy, 2000) suggest that the self-employed do not receive a monetary premium for the risk and uncertainty associated with business ownership. In this paper, I show that that income underreporting by entrepreneurs can explain the lack of evidence for monetary premia. Using a large national dataset (PSID), I first document evidence of underreporting, and then proceed to make alternative comparisons using measures of consumption. I find that the self-employed enjoy large earnings premia that are reflected in their consumption.
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Bibliographic InfoPaper provided by Florida International University, Department of Economics in its series Working Papers with number 1005.
Length: 31 pages
Date of creation: Dec 2010
Date of revision:
Entrepreneurship; self-employment; income comparison; income underreporting;
Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
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