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Employment Risk, Returns, and Entrepreneurship

Author

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  • Sarah A. Low
  • Stephan Weiler

Abstract

Comparing local employment portfolios against entrepreneurship, this research finds that local wage and salary job market prospects shape incentives for potential entrepreneurs. Entrepreneurship may thus be more attractive in areas featuring high employment risk and/or low returns. This research contributes to the existing regional employment portfolio literature by using more disaggregated data at both the county and the commuting zone levels. Commuting zones in particular represent a broader spectrum of labor market agglomerations across both rural and urban areas to provide the most stringent and revealing tests of the interrelationship between local employment portfolios and the choice to pursue entrepreneurship. The authors find a U-shaped risk/return trade-off using employment variance and growth, consistent with the literature. They test their hypothesis with a model of regional entrepreneurship, incorporating the employment portfolio variables. This is the first known study to explore the hypothesized relationship between wage and salary employment portfolios and entrepreneurship, effectively synthesizing two previously disparate literatures.

Suggested Citation

  • Sarah A. Low & Stephan Weiler, 2012. "Employment Risk, Returns, and Entrepreneurship," Economic Development Quarterly, , vol. 26(3), pages 238-251, August.
    • Handle: RePEc:sae:ecdequ:v:26:y:2012:i:3:p:238-251
    DOI: 10.1177/0891242412452445
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    4. Schmidt, Claudia & Goetz, Stephan J. & Tian, Zheng, 2021. "Female farmers in the United States: Research needs and policy questions," Food Policy, Elsevier, vol. 101(C).
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    6. Pérez Odeh, Rodrigo & Watts, David & Flores, Yarela, 2018. "Planning in a changing environment: Applications of portfolio optimisation to deal with risk in the electricity sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 82(P3), pages 3808-3823.
    7. Sherrill Shaffer & Iftekhar Hasan & Mingming Zhou, 2015. "New Small Firms and Dimensions of Economic Performance," Economic Development Quarterly, , vol. 29(1), pages 65-78, February.
    8. Tessa Conroy & Stephan Weiler, 2016. "Does gender matter for job creation? Business ownership and employment growth," Small Business Economics, Springer, vol. 47(2), pages 397-419, August.
    9. Félix Modrego & Dusan Paredes & Gianni Romaní, 2017. "Individual and place-based drivers of self-employment in Chile," Small Business Economics, Springer, vol. 49(2), pages 469-492, August.
    10. Tessa Conroy & Sarah A. Low & Stephan Weiler, 2017. "Fueling Job Engines: Impacts Of Small Business Loans On Establishment Births In Metropolitan And Nonmetro Counties," Contemporary Economic Policy, Western Economic Association International, vol. 35(3), pages 578-595, July.
    11. Tessa Conroy & Steven Deller, 2023. "I will survive…but at what (opportunity) cost?: A spatial analysis of business survival and Jacobian externalities," Growth and Change, Wiley Blackwell, vol. 54(2), pages 550-571, June.
    12. Jacqueline Chattopadhyay, 2018. "State Health Insurance Regulation and Self-Employment Rates After the Great Recession: The Role of Guaranteed Issue Mandates," Economic Development Quarterly, , vol. 32(1), pages 78-92, February.
    13. devin michelle bunten & Stephan Weiler & Eric Thompson & Sammy Zahran, 2015. "Entrepreneurship, Information, And Growth," Journal of Regional Science, Wiley Blackwell, vol. 55(4), pages 560-584, September.
    14. Sarah A. Low & Mallory L. Rahe & Andrew J. Van Leuven, 2023. "Has COVID‐19 made rural areas more attractive places to live? Survey evidence from Northwest Missouri," Regional Science Policy & Practice, Wiley Blackwell, vol. 15(3), pages 520-540, April.
    15. Deller, Steven C. & Conroy, Tessa & Markeson, Bjorn, 2018. "Social capital, religion and small business activity," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 365-381.

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