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Entrepreneurship and income inequality

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  • Halvarsson, Daniel
  • Korpi, Martin
  • Wennberg, Karl

Abstract

Entrepreneurship research highlights entrepreneurship as a simultaneous source of enhanced income mobility for some but a potential source of poverty for others. Research on inequality has furthered new types of models to decompose and problematize various sources of income inequality, but attention to entrepreneurship as an increasingly prevalent occupational choice in these models remains scant. This paper seeks to bridge these two literatures using regression-based income decomposition among entrepreneurs and paid workers distinguishing between self-employed (SE) and incorporated self-employed (ISE) individuals in Sweden. We find that the proportion of self-employed in the workforce increases income dispersion by way of widening the bottom end of the distribution, whereas the proportion of incorporated self-employed contributes to income dispersion at the top end of the distribution. Implications for research are discussed.

Suggested Citation

  • Halvarsson, Daniel & Korpi, Martin & Wennberg, Karl, 2018. "Entrepreneurship and income inequality," Journal of Economic Behavior & Organization, Elsevier, vol. 145(C), pages 275-293.
  • Handle: RePEc:eee:jeborg:v:145:y:2018:i:c:p:275-293
    DOI: 10.1016/j.jebo.2017.11.003
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    Keywords

    Inequality; Entrepreneurship; Income decomposition;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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