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A consumption-based measure of the monetary rewards to entrepreneurship

Author

Listed:
  • Dmitriy Krichevskiy

    () (Department of Economics, Florida International University)

Abstract

Recent findings by Hamilton (Journal of Political Economy, 2000) suggest that the self-employed do not receive a monetary premium for the risk and uncertainty associated with business ownership. In this paper, I show that that income underreporting by entrepreneurs can explain the lack of evidence for monetary premia. Using a large national dataset (PSID), I first document evidence of underreporting, and then proceed to make alternative comparisons using measures of consumption. I find that the self-employed enjoy large earnings premia that are reflected in their consumption.

Suggested Citation

  • Dmitriy Krichevskiy, 2010. "A consumption-based measure of the monetary rewards to entrepreneurship," Working Papers 1005, Florida International University, Department of Economics.
  • Handle: RePEc:fiu:wpaper:1005
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    File URL: http://casgroup.fiu.edu/pages/docs/1567/1292249368_10-05.pdf
    File Function: First version, 2010
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    More about this item

    Keywords

    Entrepreneurship; self-employment; income comparison; income underreporting;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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