IDEAS home Printed from https://ideas.repec.org/a/hit/hitjec/v49y2008i1p35-45.html
   My bibliography  Save this article

Self-Employment Rents : Evidence from Job Satisfaction Scores

Author

Listed:
  • Kawaguchi, Daiji

Abstract

Previous studies have pointed to the existence of barriers at the entry of self-employed sectors, such as liquidity constraints. In many countries, policies are directed toward removing these barriers in order to promote entrepreneurial activity. This paper examines whether such barriers exist by examining the amount of rent enjoyed by self-employed workers; if there are no barriers between the self-employed sector and the salary/wage sector, self-employed workers should not enjoy rents. Examination of the rent associated with self-employment, however, cannot simply be accomplished by comparing the incomes of self-employed and salary/wage workers. This is because self-employed workers may enjoy higher utility due to their work environment, with such benefits as autonomy and flexibility of work schedules. To overcome the difficulty of measuring self-employment rents, I use self-reported job satisfaction from the National Longitudinal Survey of Youth 79 (NLSY79) to capture workers' overall satisfaction with their jobs. The results robustly indicate that self-employed workers are more satisfied with their jobs than salary/wage workers, even after allowing for the time-invariant individual heterogeneity in their reported job satisfaction. This result suggests that there are barriers at the entry into self-employment and that self-employed workers enjoy rents.

Suggested Citation

  • Kawaguchi, Daiji, 2008. "Self-Employment Rents : Evidence from Job Satisfaction Scores," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 49(1), pages 35-45, June.
  • Handle: RePEc:hit:hitjec:v:49:y:2008:i:1:p:35-45
    as

    Download full text from publisher

    File URL: http://hermes-ir.lib.hit-u.ac.jp/rs/bitstream/10086/15881/1/HJeco0490100350.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-141, May.
    2. Andrew Clark & Yannis Georgellis & Peter Sanfey, "undated". "Job Satisfaction, Wage changes and Quits: Evidence from Germany," Economics and Finance Discussion Papers 98-06, Economics and Finance Section, School of Social Sciences, Brunel University.
    3. 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.
    4. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, January.
    5. Frijters, Paul, 2000. "Do individuals try to maximize general satisfaction?," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 281-304, June.
    6. Douglas Holtz-Eakin & David Joulfaian & Harvey S. Rosen, 1994. "Entrepreneurial Decisions and Liquidity Constraints," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 334-347, Summer.
    7. Taylor, Mark P, 2001. "Self-Employment and Windfall Gains in Britain: Evidence from Panel Data," Economica, London School of Economics and Political Science, vol. 68(272), pages 539-565, November.
    8. Kawaguchi, Daiji, 2003. "Human capital accumulation of salaried and self-employed workers," Labour Economics, Elsevier, vol. 10(1), pages 55-71, February.
    9. Clark, Andrew E., 2001. "What really matters in a job? Hedonic measurement using quit data," Labour Economics, Elsevier, vol. 8(2), pages 223-242, May.
    10. Tobias J. Moskowitz & Annette Vissing-Jørgensen, 2002. "The Returns to Entrepreneurial Investment: A Private Equity Premium Puzzle?," American Economic Review, American Economic Association, vol. 92(4), pages 745-778, September.
    11. Blanchflower, David G. & Oswald, Andrew & Stutzer, Alois, 2001. "Latent entrepreneurship across nations," European Economic Review, Elsevier, vol. 45(4-6), pages 680-691, May.
    12. Ada Ferrer-i-Carbonell & Paul Frijters, 2004. "How Important is Methodology for the estimates of the determinants of Happiness?," Economic Journal, Royal Economic Society, vol. 114(497), pages 641-659, July.
    13. Carrington, William J & McCue, Kristin & Pierce, Brooks, 1996. "The Role of Employer-Employee Interactions in Labor Market Cycles: Evidence from the Self-Employed," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 571-602, October.
    14. 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.
    15. Lindh, Thomas & Ohlsson, Henry, 1996. "Self-Employment and Windfall Gains: Evidence from the Swedish Lottery," Economic Journal, Royal Economic Society, vol. 106(439), pages 1515-1526, November.
    16. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Martin Binder, 2017. "Entrepreneurial Success and Subjective Well-Being: Worries about the Business Explain One's Well-Being Loss from Self-Employment," SOEPpapers on Multidisciplinary Panel Data Research 947, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Tåg, Joacim & Åstebro, Thomas & Thompson, Peter, 2016. "Hierarchies and entrepreneurship," European Economic Review, Elsevier, vol. 89(C), pages 129-147.
    3. Robert W. Fairlie & Dean Karlan & Jonathan Zinman, 2015. "Behind the GATE Experiment: Evidence on Effects of and Rationales for Subsidized Entrepreneurship Training," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 125-161, May.
    4. Keith A. Bender & Kristen Roche, 2016. "Self-employment and the paradox of the contented female worker," Small Business Economics, Springer, vol. 47(2), pages 421-435, August.
    5. Hyytinen, Ari & Ilmakunnas, Pekka & Toivanen, Otto, 2013. "The return-to-entrepreneurship puzzle," Labour Economics, Elsevier, vol. 20(C), pages 57-67.
    6. Lechmann, Daniel S. J., 2013. "Can working conditions explain the return-to-entrepreneurship puzzle?," Discussion Papers 86, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    7. Miura, Ken & Kanno, Hiromitsu & Sakurai, Takeshi, 2011. "Livestock Transactions as Coping Strategies in Zambia:New Evidence from High-Frequency Panel Data," PRIMCED Discussion Paper Series 15, Institute of Economic Research, Hitotsubashi University.
    8. Martin Binder & Alex Coad, 2013. "Life satisfaction and self-employment: a matching approach," Small Business Economics, Springer, vol. 40(4), pages 1009-1033, May.
    9. Martin Binder & Alex Coad, 2016. "How Satisfied are the Self-Employed? A Life Domain View," Journal of Happiness Studies, Springer, vol. 17(4), pages 1409-1433, August.
    10. Carmen Pages & Lucia Madrigal, 2008. "Is Informality a Good Measure of Job Quality? Evidence from Job Satisfaction Data," Research Department Publications 4603, Inter-American Development Bank, Research Department.
    11. Robert W. Fairlie & Alicia M. Robb, 2007. "Why Are Black-Owned Businesses Less Successful than White-Owned Businesses? The Role of Families, Inheritances, and Business Human Capital," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 289-323.
    12. Miura, Ken & Kanno, Hiromitsu & Sakurai, Takeshi, 2012. "Shock and Livestock Transactions in Rural Zambia: a Re-examination of the Buffer Stock Hypothesis," Japanese Journal of Rural Economics, Agricultural Economics Society of Japan (AESJ), vol. 0, pages 1-15.
    13. Ken Miura & Hiromitsu Kanno & Takeshi Sakurai, 2012. "Livestock Transactions as Coping Strategies in Zambia: New Evidence from High-Frequency Panel Data," Global COE Hi-Stat Discussion Paper Series gd11-215, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    Self-Employmen; Job Satisfaction;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hit:hitjec:v:49:y:2008:i:1:p:35-45. 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: (Digital Resources Section, Hitotsubashi University Library). General contact details of provider: http://edirc.repec.org/data/fehitjp.html .

    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 CitEc recognized a reference but did not link an item in RePEc 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 RePEc Author Service 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.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.