Advanced Search
MyIDEAS: Login to save this paper or follow this series

Can working conditions explain the return-to-entrepreneurship puzzle?

Contents:

Author Info

  • Lechmann, Daniel S. J.
Registered author(s):

    Abstract

    Most self-employed would apparently earn higher earnings if they were working in paid employment. One explanation for this 'return-to-entrepreneur-ship puzzle' could be that entrepreneurship entails substantial non-monetary bene-fits, such as autonomy, flexibility, and task variety. Utilizing German data and a de-composition analysis, this study examines the contribution of such working condi-tions to the observed earnings differential between self-employment and paid em-ployment. The results imply that working conditions differences do not contribute to resolve the return-to-entrepreneurship puzzle. Rather, (mis-)measurement of earnings seems to be an issue. -- Die meisten Selbständigen könnten als abhängig Beschäf-tigte anscheinend höhere Einkünfte erzielen. Möglicherweise arbeiten sie dennoch weiterhin als Selbständige, weil die Selbständigkeit nicht-monetäre Vorteile, wie etwa mehr Autonomie, Flexibilität und Abwechslung, mit sich bringt. Unter Verwendung eines Datensatzes deutscher Erwerbstätiger und mittels einer Zerlegungsanalyse untersucht diese Studie, inwiefern Unterschiede in solchen Arbeitsbedingungen die Unterschiede in den Einkünften zwischen Selbständigen und abhängig Beschäftigten erklären könnten. Die Ergebnisse deuten darauf hin, dass Unterschiede in den Arbeitsbedingungen nicht dazu beitragen, die (zu) niedrigen Einkünfte der Selbstän-digen zu erklären. Vielmehr scheinen Schwierigkeiten bei der Messung der Einkünfte eine Rolle zu spielen.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://econstor.eu/bitstream/10419/86158/1/770665322.pdf
    Download Restriction: no

    Bibliographic Info

    Paper provided by Friedrich-Alexander-University Erlangen-Nuremberg, Chair of Labour and Regional Economics in its series Discussion Papers with number 86.

    as in new window
    Length:
    Date of creation: 2013
    Date of revision:
    Handle: RePEc:zbw:faulre:86

    Contact details of provider:
    Web page: http://www.arbeitsmarkt.wiso.uni-erlangen.de/english-version/
    More information through EDIRC

    Related research

    Keywords: compensating differentials; Germany; returns to entrepreneurship; self-employment; working conditions;

    Find related papers by JEL classification:

    This paper has been announced in the following NEP Reports:

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. David G. Blanchflower, 2004. "Self-Employment: More may not be better," NBER Working Papers 10286, National Bureau of Economic Research, Inc.
    2. Engström, Per & Holmlund, Bertil, 2006. "Tax Evasion and Self-Employment in a High-Tax Country: Evidence from Sweden," Working Paper Series, Uppsala University, Department of Economics 2006:12, Uppsala University, Department of Economics.
    3. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 16(1), pages 26-60, January.
    4. Constant, Amelie F. & Shachmurove, Yochanan, 2003. "Entrepreneurial Ventures and Wage Differentials Between Germans and Immigrants," IZA Discussion Papers 879, Institute for the Study of Labor (IZA).
    5. Croson, David C. & Minniti, Maria, 2012. "Slipping the surly bonds: The value of autonomy in self-employment," Journal of Economic Psychology, Elsevier, Elsevier, vol. 33(2), pages 355-365.
    6. Roy Thurik & Jolanda Hessels & José Maria Millán & Rafael Aguado, 2011. "Determinants of job satisfaction: A European comparison of sel femployed and paid employees," Scales Research Reports, EIM Business and Policy Research H201106, EIM Business and Policy Research.
    7. Tobias J. Moskowitz & Annette Vissing-Jorgensen, 2002. "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?," NBER Working Papers 8876, National Bureau of Economic Research, Inc.
    8. Ernesto Villanueva, 2007. "Estimating Compensating Wage Differentials Using Voluntary Job Changes: Evidence from Germany," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(4), pages 544-561, July.
    9. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521728355.
    10. Thomas Lange, 2012. "Job satisfaction and self-employment: autonomy or personality?," Small Business Economics, Springer, Springer, vol. 38(2), pages 165-177, February.
    11. Dominik Hanglberger & Joachim Merz, 2011. "Are Self-Employed Really Happier than Employees?: An Approach Modelling Adaptation and Anticipation Effects to Self-Employment and General Job Changes," SOEPpapers on Multidisciplinary Panel Data Research 376, DIW Berlin, The German Socio-Economic Panel (SOEP).
    12. Oaxaca, Ronald, 1973. "Male-Female Wage Differentials in Urban Labor Markets," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 14(3), pages 693-709, October.
    13. de Wit, Gerrit, 1993. " Models of Self-Employment in a Competitive Market," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 7(4), pages 367-97, December.
    14. Erik Hurst & Geng Li & Benjamin Pugsley, 2014. "Are Household Surveys Like Tax Forms? Evidence from Income Underreporting of the Self-Employed," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 19-33, March.
    15. Nils Braakmann, 2007. "Differences in the earnings distribution of self- and dependent emploxed German men - evidence from a quantile regression decomposition analysis," Working Paper Series in Economics 55, University of Lüneburg, Institute of Economics.
    16. Tobias J. Moskowitz & Annette Vissing-Jørgensen, 2002. "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 745-778, September.
    17. Hyytinen, Ari & Ilmakunnas, Pekka & Toivanen, Otto, 2013. "The return-to-entrepreneurship puzzle," Labour Economics, Elsevier, Elsevier, vol. 20(C), pages 57-67.
    18. Fernández, Rosa M. & Nordman, Christophe J., 2009. "Are there pecuniary compensations for working conditions?," Labour Economics, Elsevier, Elsevier, vol. 16(2), pages 194-207, April.
    19. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521899604.
    20. Alan S. Blinder, 1973. "Wage Discrimination: Reduced Form and Structural Estimates," Journal of Human Resources, University of Wisconsin Press, vol. 8(4), pages 436-455.
    21. Heckman, James J, 1979. "Sample Selection Bias as a Specification Error," Econometrica, Econometric Society, Econometric Society, vol. 47(1), pages 153-61, January.
    22. Kawaguchi, Daiji, 2008. "Self-Employment Rents : Evidence from Job Satisfaction Scores," Hitotsubashi Journal of Economics, Hitotsubashi University, Hitotsubashi University, vol. 49(1), pages 35-45, June.
    23. Benz, Matthias & Frey, Bruno S., 2008. "The value of doing what you like: Evidence from the self-employed in 23 countries," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 68(3-4), pages 445-455, December.
    24. Daniel Lechmann & Claus Schnabel, 2012. "Why is there a gender earnings gap in self-employment? A decomposition analysis with German data," IZA Journal of European Labor Studies, Springer, Springer, vol. 1(1), pages 1-25, December.
    25. Johannes Martin, 2013. "The Impact on Earnings When Entering Self-Employment: Evidence for Germany," SOEPpapers on Multidisciplinary Panel Data Research 537, DIW Berlin, The German Socio-Economic Panel (SOEP).
    26. Sarada, FNO, 2010. "The Unobserved Returns to Entrepreneurship," University of California at San Diego, Economics Working Paper Series, Department of Economics, UC San Diego qt04b3p1p0, Department of Economics, UC San Diego.
    27. Frank M. Fossen, 2009. "Gender Differences in Entrepreneurial Choice and Risk Aversion: A Decomposition Based on a Microeconometric Model," Discussion Papers of DIW Berlin 936, DIW Berlin, German Institute for Economic Research.
    28. Puhani, Patrick A, 2000. " The Heckman Correction for Sample Selection and Its Critique," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 14(1), pages 53-68, February.
    29. 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, University of Chicago Press, vol. 87(4), pages 719-48, August.
    30. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 108(3), pages 604-631, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:zbw:faulre:86. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.