A Selection-Based Theory of the Transition from Employment to Entrepreneurship: The Role of Employer Size
A simple occupational choice model is used to predict that entrepreneurs who found new firms are more likely to work for small than for large firms prior to start-up. The mechanism underlying the result is heterogeneous risk aversion. The model also predicts a positive association between new firm formation and previous self-employment experience. These predictions accord with previous empirical findings, but notably self-selection rather than productivity effects can explain them.
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References listed on IDEAS
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- Ghatak, Maitreesh, 1999. "Group lending, local information and peer selection," Journal of Development Economics, Elsevier, vol. 60(1), pages 27-50, October.
- Wagner, Joachim, 2004. "Nascent Entrepreneurs," IZA Discussion Papers 1293, Institute for the Study of Labor (IZA).
- Maitreesh Ghatak & Massimo Morelli & Tomas Sjöström, 2001. "Occupational Choice and Dynamic Incentives," Review of Economic Studies, Oxford University Press, vol. 68(4), pages 781-810.
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- Boden, Richard Jr., 1996. "Gender and self-employment selection: An empirical assessment," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 25(6), pages 671-682.
- Cramer, J. S. & Hartog, J. & Jonker, N. & Van Praag, C. M., 2002. "Low risk aversion encourages the choice for entrepreneurship: an empirical test of a truism," Journal of Economic Behavior & Organization, Elsevier, vol. 48(1), pages 29-36, May.
- Bester, Helmut, 1985. "Screening vs. Rationing in Credit Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 75(4), pages 850-855, September.
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"The Economics of Self-Employment and Entrepreneurship,"
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- Van Praag, C Mirjam & Van Ophem, Hans, 1995. "Determinants of Willingness and Opportunity to Start as an Entrepreneur," Kyklos, Wiley Blackwell, vol. 48(4), pages 513-540. Full references (including those not matched with items on IDEAS)
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