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Selection into Entrepreneurship, Income Mobility and Firm Performance

Author

Listed:
  • Jarkko Harju

    (Tampere University & Finnish Centre of Tax Systems Research (FIT))

  • Toni Juuti

    (Labour Institute for Economic Research & Tampere University & FIT)

  • Tuomas Matikka

    (VATT Institute for Economic Research & FIT)

Abstract

Using full-population data from Finland, we show that individuals at the top of the income distribution are significantly more likely to start new incorporated businesses. High-income earners also establish more successful and productive businesses than others. In contrast, parental income is not linked with selection into new entrepreneurship or firm-level outcomes. We find that income gains from entrepreneurship are rather similar across individual and parental characteristics, and that entrepreneurship is associated with upward income mobility regardless of initial income levels. Overall, our findings suggest that entrepreneurship can serve as an upward economic ladder for individuals from diverse backgrounds.

Suggested Citation

  • Jarkko Harju & Toni Juuti & Tuomas Matikka, 2025. "Selection into Entrepreneurship, Income Mobility and Firm Performance," Working Papers 41, Finnish Centre of Excellence in Tax Systems Research.
    • Handle: RePEc:fit:wpaper:41
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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