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Successful Entrepreneurs Come From the Top of the Earned Income Distribution

Author

Listed:
  • Niklas Garnadt
  • Lena Füner
  • Konrad Stahl
  • Joacim Tag

Abstract

Identifying high growth startups ex-ante and fostering their success is an important policy challenge. Using Swedish registry data, we show that previous labor market earnings of entrepreneurs is a simple observable that is strongly correlated with entrepreneurship success. Entrepreneurs from the top decile of income from dependent employment are four times more likely to succeed than those from the lowest decile. Their firms are larger and more productive from the outset, and this effect intensifies over time. This correlation is virtually unaffected by variations in the entrepreneurs’ personal traits. It does also not vary across the business cycle.

Suggested Citation

  • Niklas Garnadt & Lena Füner & Konrad Stahl & Joacim Tag, 2025. "Successful Entrepreneurs Come From the Top of the Earned Income Distribution," CRC TR 224 Discussion Paper Series crctr224_2025_693, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_693
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp693
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    More about this item

    Keywords

    Entrepreneurship; high-growth startups; labor income; unemployment;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • L53 - Industrial Organization - - Regulation and Industrial Policy - - - Enterprise Policy
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles

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