Entrepreneurship versus Joblessness - Explaining the Rise in Self-Employment
AbstractThe self-employed constitute a large proportion of the workforce in developing countries and the sector has been found to be growing further. Different accounts exist as to the cause of this development, with pull factors such as high returns to capital and increased wealth contrasted with push factors such as barriers to entry into the wage sectors following traditional segmeted labour market models. This article considers changes in the structure of earnings for the self-employed in Ghana and compares them with the wage employed. Models of segmented labour markets typically consider sorting on unobservables to be important, and often posit a sector choice model. If there are barriers to entry into one of the sectors, however, selection on unobservables there may be no clear selection rule. We apply a simple model of a two-sector labour market and estimate earnings using a correlated random coef cients model that allows for multiple patterns of sorting and selection on unobservables using instrumental variables GMM. We nd evidence of increasing return to productive characteristics for the self-employed, but also a large wage premium. --
Download InfoIf 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.
Bibliographic InfoPaper provided by Verein für Socialpolitik / German Economic Association in its series Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order with number 80016.
Date of creation: 2013
Date of revision:
Other versions of this item:
- Paolo Falco & Luke Haywood, 2013. "Entrepreneurship versus Joblessness: Explaining the Rise in Self-Employment," Discussion Papers of DIW Berlin 1334, DIW Berlin, German Institute for Economic Research.
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2014-02-02 (All new papers)
- NEP-DEV-2014-02-02 (Development)
- NEP-ENT-2014-02-02 (Entrepreneurship)
- NEP-IUE-2014-02-02 (Informal & Underground Economics)
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.:
- Imbert, Clement, 2013.
"Decomposing the labor market earnings inequality: the public and private sectors in Vietnam, 1993-2006,"
Policy Research Working Paper Series
6344, The World Bank.
- Clément Imbert, 2013. "Decomposing the Labor Market Earnings Inequality: The Public and Private Sectors in Vietnam, 1993–2006," World Bank Economic Review, World Bank Group, vol. 27(1), pages 55-79.
- Günther, Isabel & Launov, Andrey, 2012. "Informal employment in developing countries," Journal of Development Economics, Elsevier, vol. 97(1), pages 88-98.
- Clément Imbert, 2011. "Decomposing wage inequality: Public and private sectors in Vietnam 1993-2006," PSE Working Papers halshs-00564653, HAL.
- Falco, Paolo & Maloney, William F. & Rijkers, Bob & Sarrias, Mauricio, 2012.
"Heterogeneity in Subjective Wellbeing: An Application to Occupational Allocation in Africa,"
IZA Discussion Papers
7057, Institute for the Study of Labor (IZA).
- Falco, Paolo & Maloney, William F. & Rijkers, Bob & Sarrias, Mauricio, 2012. "Heterogeneity in subjective wellbeing : an application to occupational allocation in Africa," Policy Research Working Paper Series 6244, The World Bank.
- Paolo Falco & William F. Maloney & Bob Rijkers & Mauricio Sarrias, 2010. "Heterogeneity in Subjective Wellbeing: An Application to Occupational Allocation in Africa," DOCUMENTOS CEDE 010494, UNIVERSIDAD DE LOS ANDES-CEDE.
- Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
- Blanchflower, David G & Oswald, Andrew J, 1998.
"What Makes an Entrepreneur?,"
Journal of Labor Economics,
University of Chicago Press, vol. 16(1), pages 26-60, January.
- Michael P. Keane & Kenneth I. Wolpin, 1995.
"The career decisions of young men,"
559, Federal Reserve Bank of Minneapolis.
- Tavneet Suri, 2011. "Selection and Comparative Advantage in Technology Adoption," Econometrica, Econometric Society, vol. 79(1), pages 159-209, 01.
- Richard Blundell & Stephen Bond, 2000.
"GMM Estimation with persistent panel data: an application to production functions,"
Taylor & Francis Journals, vol. 19(3), pages 321-340.
- Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
- Falco, Paolo, 2014.
"Does risk matter for occupational choices? Experimental evidence from an African labour market,"
Elsevier, vol. 28(C), pages 96-109.
- Paolo Falco, 2013. "Does risk matter for occupational choices? Experimental evidence from an African labour market," CSAE Working Paper Series 2013-15, Centre for the Study of African Economies, University of Oxford.
- Paul Robson & Helen Haugh & Bernard Obeng, 2009. "Entrepreneurship and innovation in Ghana: enterprising Africa," Small Business Economics, Springer, vol. 32(3), pages 331-350, March.
- Geeta Kingdon & Justin Sandefur & Francis Teal, 2006.
"Labour Market Flexibility, Wages and Incomes in Sub‐Saharan Africa in the 1990s,"
African Development Review,
African Development Bank, vol. 18(3), pages 392-427.
- Francis Teal & Geeta Kingdon & Justin Sandefur, 2005. "Labor Market Flexibility, Wages and Incomes in sub-Saharan Africa in the 1990s," Economics Series Working Papers GPRG-WPS-030, University of Oxford, Department of Economics.
- Poschke, Markus, 2010.
""Entrepreneurs out of Necessity": A Snapshot,"
IZA Discussion Papers
4893, Institute for the Study of Labor (IZA).
- Christopher Udry & Santosh Anagol, 2006.
"The Return to Capital in Ghana,"
American Economic Review,
American Economic Association, vol. 96(2), pages 388-393, May.
- Hugo Ñopo & Nancy Daza & Johanna Ramos, 2012. "Gender earning gaps around the world: a study of 64 countries," International Journal of Manpower, Emerald Group Publishing, vol. 33(5), pages 464-513, March.
- Evans, David S & Jovanovic, Boyan, 1989. "An Estimated Model of Entrepreneurial Choice under Liquidity Constraints," Journal of Political Economy, University of Chicago Press, vol. 97(4), pages 808-27, August.
- Arellano, Manuel & Bond, Stephen, 1991.
"Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(2), pages 277-97, April.
- Tom Doan, . "RATS program to replicate Arellano-Bond 1991 dynamic panel," Statistical Software Components RTZ00169, Boston College Department of Economics.
- Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
- Federico Huneeus & Oscar Landerretche & Esteban Puentes, 2012. "Multidimensional Measure of Job Quality: Persistence and Heterogeneity in a Developing Country," Working Papers wp357, University of Chile, Department of Economics.
- Fasih, Tazeen & Kingdon, Geeta & Patrinos, Harry Anthony & Sakellariou, Chris & Soderbom, Mans, 2012. "Heterogeneous returns to education in the labor market," Policy Research Working Paper Series 6170, The World Bank.
- Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1988.
"Estimating Vector Autoregressions with Panel Data,"
Econometric Society, vol. 56(6), pages 1371-95, November.
- Tom Doan, . "RATS program to demonstrate IV estimation of VAR in panel data," Statistical Software Components RTZ00185, Boston College Department of Economics.
- David G. Blanchflower, 2004. "Self-Employment: More may not be better," NBER Working Papers 10286, National Bureau of Economic Research, Inc.
- Lemieux, Thomas, 1998. "Estimating the Effects of Unions on Wage Inequality in a Panel Data Model with Comparative Advantage and Nonrandom Selection," Journal of Labor Economics, University of Chicago Press, vol. 16(2), pages 261-91, April.
- Magnac, Thierry & Robin, Jean-Marc, 1996. "Occupational choice and liquidity constraints," Ricerche Economiche, Elsevier, vol. 50(2), pages 105-133, June.
- Chamberlain, Gary, 1982. "Multivariate regression models for panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 5-46, January.
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 references are entirely missing, you can add them using this form.