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Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data

Author

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  • Vicente Salas-Fumás

    ()

  • J. Sanchez-Asin

    ()

  • David Storey

    ()

Abstract

This paper extends the (Lucas, Bell J Econ 9:508–523, 1978 ) model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the self-employed. That is, an option to hire employees and so become self-employed with employees (SEWEs), or to be self-employed without employees (SEWNEs). We solve for the market equilibrium and examine the sensitivity of relative sizes of occupational groups, and of the level of productivity, to changes in the exogenous parameters. The results show that the positive (negative) association between number of SEWEs (SEWNEs) and productivity, observed in the Spanish data, can be explained, under certain conditions, as the result of cross-region and time differences in average skills. These findings point to the importance of distinguishing between SEWEs and SEWNEs in drawing valid conclusions concerning any link between entrepreneurship and economic development. Copyright The Author(s) 2014

Suggested Citation

  • Vicente Salas-Fumás & J. Sanchez-Asin & David Storey, 2014. "Occupational choice, number of entrepreneurs and output: theory and empirical evidence with Spanish data," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(1), pages 1-24, March.
  • Handle: RePEc:spr:series:v:5:y:2014:i:1:p:1-24
    DOI: 10.1007/s13209-013-0103-5
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    References listed on IDEAS

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    Cited by:

    1. Michele Dell'Era & Luís Santos-Pinto & Luca David Opromolla, 2018. "A General Equilibrium Theory of Occupational Choice under Optimistic Beliefs about Entrepreneurial Ability," Working Papers w201822, Banco de Portugal, Economics and Research Department.

    More about this item

    Keywords

    Occupational choice; Self-employment; Entrepreneurship; Entrepreneurial skills; Spanish economy; J24; L26; D24;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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