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The best and the brightest or the least successful? Self-employment entry among male wage-earners in Sweden

  • Pernilla Andersson Joona

    ()

  • Eskil Wadensjö

This paper analyzes self-employment entry among Swedish-born male wage-earners. Is it the best and the brightest or the least successful that become self-employed? The residual from an income regression is used as an indicator of who belongs to which group. We find that both wage-earners who receive a lower income than predicted, i.e. have a negative residual, and those who receive a higher income than predicted, i.e. have a positive residual, are more likely to become self-employed than those who receive an income close to the predicted one. However, splitting self-employment into different types depending on corporate form and number of employees, we find that the self-employed are drawn from both tails of the residual distribution only if it is a matter of unincorporated firms. Wage-earners who become self-employed and start an incorporated firm are only drawn from the top of the residual distribution. Using self-employment income and turnover as measures of self-employment performance, we find a positive linear relationship between the income residual and performance. Copyright Springer Science+Business Media, LLC. 2013

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File URL: http://hdl.handle.net/10.1007/s11187-011-9365-0
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Article provided by Springer in its journal Small Business Economics.

Volume (Year): 40 (2013)
Issue (Month): 1 (January)
Pages: 155-172

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Handle: RePEc:kap:sbusec:v:40:y:2013:i:1:p:155-172
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