Becoming an Entrepreneur
AbstractUsing the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few superstar winners. Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch.
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Bibliographic InfoPaper provided by Inter-American Development Bank in its series IDB Publications with number 6844.
Date of creation: Mar 2007
Date of revision:
Labor Policy; WP-605;
Other versions of this item:
- Hugo Ã‘opo & Patricio Valenzuela, 2007. "Becoming an Entrepreneur," Research Department Publications, Inter-American Development Bank, Research Department 4519, Inter-American Development Bank, Research Department.
- Nopo, Hugo & Valenzuela, Patricio, 2007. "Becoming an Entrepreneur," IZA Discussion Papers 2716, Institute for the Study of Labor (IZA).
- J16 - Labor and Demographic Economics - - Demographic Economics - - - Economics of Gender; Non-labor Discrimination
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
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