Douhan, Robin (Research Institute of Industrial Economics (IFN)) van Praag, Mirjam () (University of Amsterdam)
Abstract
We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.
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Publisher Info
Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number
805.
Length: 25 pages Date of creation: 20 Aug 2009 Date of revision: Handle: RePEc:hhs:iuiwop:0805
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