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Entrepreneurship and Income Inequality

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  • Halvarsson, Daniel

    (The Ratio Institute)

  • Korpi, Martin

    (The Ratio Institute)

  • Wennberg, Karl

    (The Ratio Institute and the Department of Management and Engineering (IEI) and Institute of Analytical Sociology (IAS) Norrköping)

Abstract

Entrepreneurship research highlights individual entrepreneurship as a simultaneous source of enhanced income mobility for some but a potential source of poverty for others. Research on inequality has furthered new types of models to decompose and problematize various sources of income inequality in modern economies, but attention to entrepreneurship as an increasingly prevalent occupational choice in these models remains scant. This paper seeks to bridge these two literatures by applying regression-based income decomposition among entrepreneurs and paid workers, distinguishing between self-employed (SE) and incorporated self-employed (ISE) individuals in Sweden. We find that the proportion of self-employed in the workforce significantly increases income dispersion by way of widening the bottom end of the distribution, whereas the proportion of incorporated self-employed contributes only marginally to income dispersion at the top end of the distribution.

Suggested Citation

  • Halvarsson, Daniel & Korpi, Martin & Wennberg, Karl, 2016. "Entrepreneurship and Income Inequality," Ratio Working Papers 281, The Ratio Institute.
    • Handle: RePEc:hhs:ratioi:0281
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    Cited by:

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    More about this item

    Keywords

    entrepreneurship; income decomposition;

    JEL classification:

    • 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
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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