Becoming an Entrepreneur
Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few “superstar winners. ” Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch.
|Date of creation:||Mar 2007|
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"Ethnicity and Earnings in Urban Peru,"
Middlebury College Working Paper Series
0405, Middlebury College, Department of Economics.
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"The Jack-of-All-Trades Entrepreneur: Innate Talent or Acquired Skill?,"
IZA Discussion Papers
2264, Institute for the Study of Labor (IZA).
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"Consumer Discrimination and Self-employment,"
Journal of Political Economy,
University of Chicago Press, vol. 97(3), pages 581-605, June.
- Edward P. Lazear, 2004. "Balanced Skills and Entrepreneurship," American Economic Review, American Economic Association, vol. 94(2), pages 208-211, May.
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