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Windfalls, Wealth, and the Transition to Self-Employment

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  • Yannis Georgellis
  • John Sessions
  • Nikolaos Tsitsianis

Abstract

We examine the transition to, and survival in, self-employment among a sample of British workers. We find evidence of capital constrains, with wealthier individuals being more likely to transit ceteris paribus. Windfall gains raise the probability of transition at a decreasing rate – gains or more than £20000–£22000 reduce the probability of transition – and larger gains reduce the probability of transition amongst relatively wealthier respondents. We also find peculiarities in the effects of particular types of windfall; redundancy payments and inheritances raise the probability of transition, whilst lottery wins reduce the probability of (especially male) transitions. In contrast, inheritances (lottery wins) hinder (augment) self-employment survival. Copyright Springer 2005

Suggested Citation

  • Yannis Georgellis & John Sessions & Nikolaos Tsitsianis, 2005. "Windfalls, Wealth, and the Transition to Self-Employment," Small Business Economics, Springer, vol. 25(5), pages 407-428, December.
  • Handle: RePEc:kap:sbusec:v:25:y:2005:i:5:p:407-428
    DOI: 10.1007/s11187-004-6477-9
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    References listed on IDEAS

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    1. Bruce D. Meyer, 1990. "Why Are There So Few Black Entrepreneurs?," NBER Working Papers 3537, National Bureau of Economic Research, Inc.
    2. P Abell & R Crouchley & D Smeaton, 1994. "An Aggregate Time Series Analysis of Non-Agricultural Self-Employment in the UK," CEP Discussion Papers dp0209, Centre for Economic Performance, LSE.
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    Cited by:

    1. Darja Reuschke, 2011. "Self-Employment and Geographical Mobility in Germany," SOEPpapers on Multidisciplinary Panel Data Research 417, DIW Berlin, The German Socio-Economic Panel (SOEP).
    2. Peter van der Zwan & Ingrid Verheul & Roy Thurik & Isabel Grilo, 2009. "Entrepreneurial Progress: Climbing the Entrepreneurial Ladder in Europe and the US," Tinbergen Institute Discussion Papers 09-070/3, Tinbergen Institute, revised 17 Mar 2010.
    3. Muravyev, Alexander & Talavera, Oleksandr & Schäfer, Dorothea, 2009. "Entrepreneurs' gender and financial constraints: Evidence from international data," Journal of Comparative Economics, Elsevier, vol. 37(2), pages 270-286, June.
    4. Nadia Simoes & Nuno Crespo & Sandrina B. Moreira, 2016. "Individual Determinants Of Self-Employment Entry: What Do We Really Know?," Journal of Economic Surveys, Wiley Blackwell, vol. 30(4), pages 783-806, September.
    5. Giuseppe Coco & Giuseppe Pignataro, 2013. "Unfair credit allocations," Small Business Economics, Springer, vol. 41(1), pages 241-251, June.
    6. repec:taf:regstd:v:51:y:2017:i:9:p:1312-1323 is not listed on IDEAS
    7. Bosma, Niels & Hessels, Jolanda & Schutjens, Veronique & Praag, Mirjam Van & Verheul, Ingrid, 2012. "Entrepreneurship and role models," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 410-424.
    8. Dongxu Wu & Zhongmin Wu, 2015. "Intergenerational links, gender differences, and determinants of self-employment," Journal of Economic Studies, Emerald Group Publishing, vol. 42(3), pages 400-414, August.
    9. Heinrichs, Simon & Walter, Sascha, 2013. "Who Becomes an Entrepreneur? A 30-Years-Review of Individual-Level Research and an Agenda for Future Research," EconStor Preprints 68590, ZBW - German National Library of Economics.
    10. Andrew Henley, 2017. "The post-crisis growth in the self-employed: volunteers or reluctant recruits?," Regional Studies, Taylor & Francis Journals, vol. 51(9), pages 1312-1323, September.
    11. Georgellis, Yannis & Sessions, John G. & Tsitsianis, Nikolaos, 2008. "Social capital and windfalls: Empirical evidence," Economics Letters, Elsevier, vol. 99(3), pages 521-525, June.
    12. Henley, Andrew, 2009. "Switching Costs and Occupational Transition into Self-Employment," IZA Discussion Papers 3969, Institute for the Study of Labor (IZA).
    13. Verheul, Ingrid & Thurik, Roy & Grilo, Isabel & van der Zwan, Peter, 2012. "Explaining preferences and actual involvement in self-employment: Gender and the entrepreneurial personality," Journal of Economic Psychology, Elsevier, vol. 33(2), pages 325-341.
    14. Blanchflower, David G. & Shadforth, Chris, 2007. "Entrepreneurship in the UK," Foundations and Trends(R) in Entrepreneurship, now publishers, vol. 3(4), pages 257-364, July.
    15. Elston, Julie Ann & Audretsch, David B., 2010. "Risk attitudes, wealth and sources of entrepreneurial start-up capital," Journal of Economic Behavior & Organization, Elsevier, vol. 76(1), pages 82-89, October.
    16. Julie Elston & David Audretsch, 2011. "Financing the entrepreneurial decision: an empirical approach using experimental data on risk attitudes," Small Business Economics, Springer, vol. 36(2), pages 209-222, February.
    17. Dirk Dohse & Sascha Walter, 2012. "Knowledge context and entrepreneurial intentions among students," Small Business Economics, Springer, vol. 39(4), pages 877-895, November.
    18. Dawson, Christopher & Henley, Andrew & Latreille, Paul L., 2009. "Why Do Individuals Choose Self-Employment?," IZA Discussion Papers 3974, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    Self-employment; transitions; windfalls; J0; J5; J23;

    JEL classification:

    • J0 - Labor and Demographic Economics - - General
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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