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What Is Left to Residual Claimants? The Empirics of Income Reported by Entrepreneurs and Workers

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Author Info

  • Poutvaara, Panu

    ()
    (University of Munich)

  • Tuomala, Juha

    ()
    (VATT, Helsinki)

Abstract

Using Finnish panel data, we study how entrepreneurs differ from workers in education and income dynamics. We find that workers have higher median income in all educational groups. Without additional controls, entrepreneurs have higher average income with all but undergraduate level of education. However, random effects and matching models suggest that entrepreneurs have lower incomes. We also analyze those who changed careers. Those with higher level of education are more likely to switch from entrepreneurship to workers, while education does not explain, in a statistically significant level, switching from being worker to entrepreneurship.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1178.

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Length: 25 pages
Date of creation: Jun 2004
Date of revision:
Handle: RePEc:iza:izadps:dp1178

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Keywords: entrepreneurs; workers; Finnish labor market; education;

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References

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  1. Tomi Kyyrä, 1999. "Post-Unemployment Wages and Economic Incentives to Exit from Unemployment," Research Reports 56, Government Institute for Economic Research Finland (VATT).
  2. Aki Kangasharju & Sari Pekkala, 2001. "The Role of Education in Self-Employment Success," Studies in Economics 0116, Department of Economics, University of Kent.
  3. Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
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Cited by:
  1. Maliranta, Mika & Nurmi, Satu, 2004. "Analyzing Entrepreneurship with the Finnish Linked Employer-Employee Data (FLEED).Matching and qualitative properties of the data," Discussion Papers 920, The Research Institute of the Finnish Economy.
  2. Vesa Kanniainen & Mikko Leppämäki, 2009. "Union power, entrepreneurial risk, and entrepreneurship," Small Business Economics, Springer, vol. 33(3), pages 293-302, October.
  3. Maliranta, Mika & Nurmi, Satu, 2004. "Do Foreign Players Change the Nature of the Game Among Local Entrepreneurs?," Discussion Papers 942, The Research Institute of the Finnish Economy.
  4. Matthias Benz, . "Entrepreneurship as a non-profit-seeking activity," IEW - Working Papers 243, Institute for Empirical Research in Economics - University of Zurich.

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