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Stars and Misfits: Self-Employment and Labor Market Frictions

Author

Listed:
  • Thomas Astebro

    (HEC Paris)

  • Jing Chen

    (Department of Economics, Florida International University)

  • Peter Thompson

    (Department of Economics, Florida International University)

Abstract

Recent evidence has shown that entrants into self-employment are disproportionately drawn from the tails of the earnings and ability distributions. This observation is explained by a multi-task model of occupational choice in which frictions in the labor market induces mismatches between firms and workers, and mis-assignment of workers to tasks. The model also yields distinctive predictions relating prior work histories to earnings and to the probability of entry into self-employment. These predictions are tested with the Korean Labor and Income Panel Study, from which we find considerable support for the model.

Suggested Citation

  • Thomas Astebro & Jing Chen & Peter Thompson, 2010. "Stars and Misfits: Self-Employment and Labor Market Frictions," Working Papers 1003, Florida International University, Department of Economics.
    • Handle: RePEc:fiu:wpaper:1003
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    File URL: http://casgroup.fiu.edu/pages/docs/1567/1275074349_10-03.pdf
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    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

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