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An Estimated Model of Employer and Non-Employer Entrepreneurship

Author

Listed:
  • Hossain, Md Mobarak

    (Northern Arizona University)

  • Fossen, Frank M.

    (University of Nevada, Reno)

  • Mukhopadhyay, Sankar

    (University of Nevada, Reno)

Abstract

What motivates individuals to become entrepreneurs and create jobs? We develop and estimate a dynamic structural microeconometric model that accounts for both employer and non-employer entrepreneurs. Individuals in each period choose to work as an employee, as one of the two entrepreneur types, or remain non-employed. Different work experiences may affect earnings in the three sectors differently. The estimated model replicates key data patterns. The results suggest that experience in employment provides positive returns in entrepreneurship, but entrepreneurial experience does not have positive returns in employment. The model is used to simulate how policy scenarios would affect individuals' entrepreneurial choices.

Suggested Citation

  • Hossain, Md Mobarak & Fossen, Frank M. & Mukhopadhyay, Sankar, 2025. "An Estimated Model of Employer and Non-Employer Entrepreneurship," IZA Discussion Papers 18009, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp18009
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    Keywords

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    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis

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