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Horatio Alger Meets the Mobility Tables

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  • Douglas Holtz-Eakin
  • Harvey S. Rosen
  • Robert Weathers

Abstract

The question of how entrepreneurship relates to income mobility is cogent given the current public debate about the sources of income inequality and mobility in United States society. We examine how experience with entrepreneurship has affected an individual's place in the earnings distribution. Our basic tack is to follow individuals' positions in the income distribution over time, and to see how their mobility (or lack thereof) was affected by involvement with entrepreneurship. Our main finding is that for low-income individuals there is some merit to the notion that the self-employed moved ahead in the earnings distribution relative to those who remained wage earners. On the other hand, for those at the upper end of the earnings distribution, those who became self-employed often advanced less in the earnings distribution than their salaried counterparts.

Suggested Citation

  • Douglas Holtz-Eakin & Harvey S. Rosen & Robert Weathers, 2000. "Horatio Alger Meets the Mobility Tables," NBER Working Papers 7619, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:7619
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    Cited by:

    1. Mikko Leppämäki & Vesa Kanniainen, 2000. "Entrepreneurship in a Unionised Economy," CESifo Working Paper Series 379, CESifo.
    2. Kolko, Jed & Neumark, David, 2010. "Does local business ownership insulate cities from economic shocks?," Journal of Urban Economics, Elsevier, vol. 67(1), pages 103-115, January.
    3. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
    4. Robert W. Fairlie & Christopher Woodruff, 2007. "Mexican Entrepreneurship: A Comparison of Self-Employment in Mexico and the United States," NBER Chapters, in: Mexican Immigration to the United States, pages 123-158, National Bureau of Economic Research, Inc.
    5. Douhan, Robin & Henrekson, Magnus, 2007. "The Political Economy of Entrepreneurship: An Introduction," Working Paper Series 688, Research Institute of Industrial Economics.
    6. Dimitris Georgarakos & Konstantinos Tatsiramos, 2009. "Immigrant self-employment: does intermarriage matter?," Research in Labor Economics, in: Amelie F. Constant & Konstantinos Tatsiramos & Klaus F. Zimmermann (ed.), Ethnicity and Labor Market Outcomes, volume 29, pages 253-271, Emerald Publishing Ltd.
    7. Lindquist, Matthew J. & Sol, Joeri & van Praag, Mirjam C. & Vladasel, Theodor, 2016. "On the Origins of Entrepreneurship: Evidence from Sibling Correlations," IZA Discussion Papers 10278, Institute of Labor Economics (IZA).
    8. Francesca Castellani & Eduardo Lora, 2014. "Is Entrepreneurship a Channel of Social Mobility in Latin America?," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(2), pages 179-194, November.
    9. Yannis Georgellis & Howard Wall, 2005. "Gender differences in self-employment," International Review of Applied Economics, Taylor & Francis Journals, vol. 19(3), pages 321-342.
    10. Taehyun Ahn, 2015. "The employment dynamics of less‐educated men in the United States: The role of self‐employment," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 48(1), pages 110-133, February.
    11. Georgarakos, Dimitris & Tatsiramos, Konstantinos, 2009. "Entrepreneurship and survival dynamics of immigrants to the U.S. and their descendants," Labour Economics, Elsevier, vol. 16(2), pages 161-170, April.
    12. Jason M. DeBacker & Bradley T. Heim & Vasia Panousi & Shanthi Ramnath & Ivan Vidangos, 2012. "The properties of income risk in privately held businesses," Finance and Economics Discussion Series 2012-69, Board of Governors of the Federal Reserve System (U.S.).
    13. Sam Tavassoli & Viroj Jienwatcharamongkhol, 2016. "Survival of entrepreneurial firms: the role of agglomeration externalities," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 28(9-10), pages 746-767, October.
    14. William J. Dennis Jr. & Lloyd W. Fernald Jr., 2001. "The Chances of Financial Success (and Loss) from Small Business Ownership," Entrepreneurship Theory and Practice, , vol. 26(1), pages 75-83, October.
    15. Magnus Lofstrom, 2011. "Low-skilled immigrant entrepreneurship," Review of Economics of the Household, Springer, vol. 9(1), pages 25-44, March.
    16. Taehyun Ahn, 2016. "An Analysis of Employment Dynamics in Korea: The Role of Temporary Work and Self-Employment," Working Papers 1606, Research Institute for Market Economy, Sogang University.
    17. Wang, Qing & Lin, Mengyun, 2019. "Work-family policy and female entrepreneurship: Evidence from China's subsidized child care program," China Economic Review, Elsevier, vol. 54(C), pages 256-270.
    18. Thor Olav Thoresen, 2009. "Income Mobility of Owners of Small Businesses when Boundaries between Occupations are Vague," CESifo Working Paper Series 2633, CESifo.
    19. Dynan Karen & Elmendorf Douglas & Sichel Daniel, 2012. "The Evolution of Household Income Volatility," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 12(2), pages 1-42, December.
    20. Robert W. Fairlie & Alicia M. Robb, 2008. "Race and Entrepreneurial Success: Black-, Asian-, and White-Owned Businesses in the United States," MIT Press Books, The MIT Press, edition 1, volume 1, number 026206281x.
    21. Tessa Conroy & Steven Deller & Philip Watson, 2021. "Regional income inequality: a link to women-owned businesses," Small Business Economics, Springer, vol. 56(1), pages 189-207, January.
    22. Meh, Césaire A., 2008. "Business risk, credit constraints, and corporate taxation," Journal of Economic Dynamics and Control, Elsevier, vol. 32(9), pages 2971-3008, September.
    23. Bruce, Donald & Schuetze, Herbert J., 2004. "The labor market consequences of experience in self-employment," Labour Economics, Elsevier, vol. 11(5), pages 575-598, October.

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    More about this item

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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