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Self-Employed but Looking: A Labor Market Experiment

Author

Listed:
  • Koellinger, Ph.D.
  • Mell, J.N.
  • Pohl, I.
  • Roessler, C.
  • Treffers, T.

Abstract

We examine whether having previously been self-employed is a negative signal on the job market. In a UK field experiment where two applications of otherwise equally qualified individuals were sent out in response to the same vacancies in human resource management, we find that entrepreneurs systematically receive fewer responses than non-entrepreneurs. Empirical studies that treat market wages as the opportunity cost of remaining self-employed are therefore likely to overestimate alternative earnings to entrepreneurship.

Suggested Citation

  • Koellinger, Ph.D. & Mell, J.N. & Pohl, I. & Roessler, C. & Treffers, T., 2012. "Self-Employed but Looking: A Labor Market Experiment," ERIM Report Series Research in Management ERS-2012-022-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:38004
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    Cited by:

    1. Lina Aldén & Spencer Bastani & Mats Hammarstedt, 2021. "Ethnic Background and the Value of Self‐Employment Experience: Evidence from a Randomized Field Experiment," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 83(6), pages 1287-1310, December.
    2. Failla, Virgilio & Melillo, Francesca & Reichstein, Toke, 2017. "Entrepreneurship and employment stability — Job matching, labour market value, and personal commitment," Journal of Business Venturing, Elsevier, vol. 32(2), pages 162-177.
    3. Szennay, Áron & Radácsi, László & Timár, Gigi, 2021. "Szabadúszók Magyarországon. Egy új kutatási program elméleti háttere és első empirikus eredményei [Freelancers in Hungary: the theoretical background and initial empirical results of a new research," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(S11), pages 78-106.
    4. Emma Lappi, 2024. "New hires, adjustment costs, and knowledge transfer—evidence from the mobility of entrepreneurs and skills on firm productivity," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(3), pages 712-737.
    5. Gorkem Aksaray & Peter Thompson, 2018. "Density Dependence of Entrepreneurial Dynamics: Competition, Opportunity Cost, or Minimum Efficient Scale?," Management Science, INFORMS, vol. 64(5), pages 2263-2274, May.
    6. Emma Lappi & Johan E. Eklund & Johan Klaesson, 2022. "Does education matter for the earnings of former entrepreneurs? Longitudinal evidence using entry and exit dynamics," Journal of Evolutionary Economics, Springer, vol. 32(3), pages 827-865, July.
    7. Lougui, Monia & Broström, Anders, 2020. "The Labor Market Value of Experience from Temporary Self-employment," Working Paper Series in Economics and Institutions of Innovation 484, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    8. Emma Lappi, 2023. "Help from the past—coworker ties and entry wages after self-employment," Small Business Economics, Springer, vol. 60(3), pages 1171-1196, March.
    9. Klyver, Kim & Steffens, Paul & Lomberg, Carina, 2020. "Having your cake and eating it too? A two-stage model of the impact of employment and parallel job search on hybrid nascent entrepreneurship," Journal of Business Venturing, Elsevier, vol. 35(5).
    10. Schaerer, Michael & du Plessis, Christilene & Nguyen, My Hoang Bao & van Aert, Robbie C.M. & Tiokhin, Leo & Lakens, Daniël & Giulia Clemente, Elena & Pfeiffer, Thomas & Dreber, Anna & Johannesson, Mag, 2023. "On the trajectory of discrimination: A meta-analysis and forecasting survey capturing 44 years of field experiments on gender and hiring decisions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 179(C).
    11. Francesca Melillo, 2023. "Going From Entrepreneur Back to Employee: Employer Type, Task Variety, and Job Satisfaction," GREDEG Working Papers 2023-21, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    12. Küsshauer, Alexander & Baum, Matthias, 2023. "The good, the bad and the uncertain: Employers' perceptions of former entrepreneurs," Journal of Business Venturing, Elsevier, vol. 38(2).
    13. Merida, Adrian L. & Rocha, Vera, 2021. "It's about time: The timing of entrepreneurial experience and the career dynamics of university graduates," Research Policy, Elsevier, vol. 50(1).
    14. Urbig, Diemo & Reif, Karina & Lengsfeld, Stephan & Procher, Vivien D., 2021. "Promoting or preventing entrepreneurship? Employers’ perceptions of and reactions to employees’ entrepreneurial side jobs," Technological Forecasting and Social Change, Elsevier, vol. 172(C).

    More about this item

    Keywords

    discrimination; entrepreneurial incomes; natural field experiment; occupational choice; self-employment;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • J62 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Job, Occupational and Intergenerational Mobility; Promotion
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M00 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - General - - - General
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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