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Stars and Misfits: Self-Employment and Labor Market Frictions

Listed author(s):
  • Thomas B. Astebro

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

  • Jing Chen

    (Copenhagen Business School - CBS - Copenhagen Business School [Copenhagen])

  • Peter Thompson

    (Department of Economics - Florida International University (FIU))

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 multitask model of occupational choice in which frictions in the labor market induce mismatches between firms and workers, and misassignment 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.

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Paper provided by HAL in its series Post-Print with number hal-00647945.

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Date of creation: Nov 2011
Publication status: Published in Management Science, INFORMS, 2011, 57 (11), pp.1999-2017. <10.1287/mnsc.1110.1400>
Handle: RePEc:hal:journl:hal-00647945
DOI: 10.1287/mnsc.1110.1400
Note: View the original document on HAL open archive server: https://hal-hec.archives-ouvertes.fr/hal-00647945
Contact details of provider: Web page: https://hal.archives-ouvertes.fr/

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