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On preferences for being self-employed

  • Fuchs-Schündeln, Nicola

The concept of procedural utility assumes that agents not only receive utility from outcomes but also attach an independent value to the procedures that lead to these outcomes. This paper analyzes whether the preferences that underlie procedural utility are homogeneous using the case of independence at the workplace. I exploit the event of German reunification to assign preferences for independence to respondents without using data on occupational choice or directly reported procedural preferences. I find that the self-employed report higher job satisfaction than the employed, even after controlling for income and hours worked. However, there is a significant amount of heterogeneity in this effect: while "independent types" experience a large increase in job satisfaction from being self-employed, the most "hierarchical types" could even experience a decrease.

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File URL: http://www.sciencedirect.com/science/article/B6V8F-4W1JVWM-1/2/6cf5f7fa05382e48e4f83c9e241dc264
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Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 71 (2009)
Issue (Month): 2 (August)
Pages: 162-171

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Handle: RePEc:eee:jeborg:v:71:y:2009:i:2:p:162-171
Contact details of provider: Web page: http://www.elsevier.com/locate/jebo

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  2. Blanchflower, D.G. & Oswald, A., 1991. "What Makes an Entrepreneur?," Economics Series Working Papers 99125, University of Oxford, Department of Economics.
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  9. Thomas Lange & Yannis Georgellis, 2007. "New perspectives on labour market intervention," International Journal of Manpower, Emerald Group Publishing, vol. 28(1), pages 4 - 6, January.
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  11. Bruno S. Frey & Matthias Benz & Alois Stutzer, 2003. "Introducing Procedural Utility: Not only What, but also How Matters," CREMA Working Paper Series 2003-02, Center for Research in Economics, Management and the Arts (CREMA).
  12. Ng, Yew-Kwang, 1997. "A Case for Happiness, Cardinalism, and Interpersonal Comparability," Economic Journal, Royal Economic Society, vol. 107(445), pages 1848-58, November.
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  17. Fuchs-Schundeln, Nicola & Alesina, Alberto, 2007. "Good-Bye Lenin (Or Not?): The Effect of Communism on People's Preferences," Scholarly Articles 4553032, Harvard University Department of Economics.
  18. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
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