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Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework

Author

Listed:
  • Douhan, Robin

    (Research Institute of Industrial Economics (IFN))

  • van Praag, Mirjam

    (University of Amsterdam)

Abstract

We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.

Suggested Citation

  • Douhan, Robin & van Praag, Mirjam, 2009. "Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework," Working Paper Series 805, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0805
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    Cited by:

    1. Mirjam van Praag & Arjen van Witteloostuijn & Justin van der Sluis, 2009. "Returns for Entrepreneurs versus Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vis-a-vis Wage Employees," Tinbergen Institute Discussion Papers 09-111/3, Tinbergen Institute.
    2. Johannes Martin, 2013. "The Impact on Earnings When Entering Self-Employment: Evidence for Germany," SOEPpapers on Multidisciplinary Panel Data Research 537, DIW Berlin, The German Socio-Economic Panel (SOEP).
    3. Fossen, Frank M. & Büttner, Tobias J.M., 2013. "The returns to education for opportunity entrepreneurs, necessity entrepreneurs, and paid employees," Economics of Education Review, Elsevier, vol. 37(C), pages 66-84.
    4. Daghbashyan, Zara & Hårsman, Björn, 2012. "Entrepreneurship and Arts Related Education," Working Paper Series in Economics and Institutions of Innovation 295, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    5. Mirko Felchner, 2015. "Einkommensdynamik bei Selbständigen als Freie Berufe und abhängig Beschäftigte Eine dynamische Paneldatenschätzung mit Daten des Sozio-oekonomischen Panels," FFB-Discussionpaper 101, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg.
    6. van Praag, Mirjam C. & van Witteloostuijn, Arjen & van der Sluis, Justin, 2009. "Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees," IZA Discussion Papers 4628, Institute of Labor Economics (IZA).
    7. Focacci, Chiara Natalie & Santarelli, Enrico, 2021. "Job Training, Remote Working, and Self-Employment: Displaced Workers Beyond Employment Hysteresis," GLO Discussion Paper Series 780, Global Labor Organization (GLO).
    8. Jolanda Hessels & Brigitte Hoogendoorn & Peter van der Zwan & Nardo de Vries, 2013. "Global Entrepreneurship Monitor The Netherlands 2012," Scales Research Reports H201314, EIM Business and Policy Research.

    More about this item

    Keywords

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    JEL classification:

    • I20 - Health, Education, and Welfare - - Education - - - General
    • 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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