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Why leave wage work and become self-employed ? Independence, earnings or unemployment

Author

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  • Tattara, Giuseppe
  • Volpe, Mario

Abstract

The paper addresses the problem of the relation between self-employment and employee status. The issue is whether self-employment is a form of disguised unemployment or a suitable long term form of employment towards which gravitate the most successful wage-workers: wage-workers attracted by an activity that is more independent and more apt to bring their personality to the foreground. The paper focuses on a detailed study of previous experience as an employee (entrance, duration, mobility, status, firm’s size) to evaluate this point. Individuals enter self-employment for the first time at a very young age, and the choice is the result of a period of high mobility, unemployment and inactivity after the first entrance into the labour market as an employee. Self-employment does not seem to be bound by a liquidity constraint or by the need to accumulate assets in order to start a viable businesses, the usual reasons brought about to explain deferred entry, or by the time necessary to discover a viable business opportunity: it is directly linked to movements in wage employment and represents a temporary solution to face an unattended negative shock.

Suggested Citation

  • Tattara, Giuseppe & Volpe, Mario, 1999. "Why leave wage work and become self-employed ? Independence, earnings or unemployment," MPRA Paper 10780, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:10780
    as

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    File URL: https://mpra.ub.uni-muenchen.de/10780/1/MPRA_paper_10780.pdf
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    References listed on IDEAS

    as
    1. Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-679, June.
    2. Magnac, T. & Robin, J. -M., 1995. "An econometric analysis of labour market transitions using discrete and tenure data," Labour Economics, Elsevier, vol. 2(1), pages 106-106, March.
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    4. Carroll, Glenn R. & Mosakowski, Elaine M., 1987. "The Career Dynamics of Self-Employment," Institute for Research on Labor and Employment, Working Paper Series qt13p1n10b, Institute of Industrial Relations, UC Berkeley.
    5. Evans, David S & Leighton, Linda S, 1989. "Some Empirical Aspects of Entrepreneurship," American Economic Review, American Economic Association, vol. 79(3), pages 519-535, June.
    6. James Heckman, 2013. "Sample selection bias as a specification error," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 31(3), pages 129-137.
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    Keywords

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    JEL classification:

    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J82 - Labor and Demographic Economics - - Labor Standards - - - Labor Force Composition
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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