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New Evidence on the Relationship between Risk Attitudes and Self-Employment

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  • Skriabikova, Olga

    () (Maastricht University)

  • Dohmen, Thomas

    () (University of Bonn and IZA)

  • Kriechel, Ben

    () (Economix Research & Consulting)

Abstract

This paper analyses the impact of risk attitudes on the decision to become self-employed among individuals who grew up under the communist regime in Ukraine, which banned self-employment so that individuals could not observe what it is like to be self-employed. Since the intra-family transmission of self-employment experiences was largely shut down, the observed correlation between risk preferences and self-employment after transition is unlikely to be driven by parents transmitting self-employment experience and risk preferences to their children. Robustness checks on a sample of East Germans confirm that such a third factor explanation is implausible, thus shedding light on the causal nature of the relation between risk preferences and the decision to become self-employed.

Suggested Citation

  • Skriabikova, Olga & Dohmen, Thomas & Kriechel, Ben, 2014. "New Evidence on the Relationship between Risk Attitudes and Self-Employment," IZA Discussion Papers 8354, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp8354
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    Keywords

    ULMS; risk attitudes; self-employment; intergenerational transmission of self-employment and risk attitudes; SOEP;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • P3 - Economic Systems - - Socialist Institutions and Their Transitions

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