IDEAS home Printed from https://ideas.repec.org/p/tin/wpaper/20140109.html
   My bibliography  Save this paper

The Stature of the Self-employed and its Premium

Author

Listed:
  • Cornelius A. Rietveld

    (Erasmus University Rotterdam)

  • Jolanda Hessels

    (Erasmus University Rotterdam)

  • Peter van der Zwan

    (Erasmus University Rotterdam)

Abstract

This discussion paper resulted in a publication in 'Economics and Human Biology' , 2015, 17, 59-74. Taller individuals typically have occupations with higher social status and higher earnings than shorter individuals. Further, entrepreneurship is associated with high social status in numerous countries; hence, entrepreneurs might be taller than wage workers. Using data from the German Socio-Economic Panel (2002-2010), we find that a 1 cm increase in an individual’s height raises the probability of being self-employed (the most common proxy for entrepreneurship) versus paid employed by 0.16 percentage-points. Within self-employment the probability of being an employer is increased by 0.11 percentage-points as a result of a 1 cm increase in height whereas this increase is 0.05 percentage-points for an own-account worker. Furthermore, we confirm that a height premium in earnings exists for not only paid employees, as indicated by prior studies, but also for self-employed individuals. An additional 1 cm in height is associated with a 0.44% increase in hourly earnings for paid employees, and a 0.87% increase for self-employed individuals. The predicted earnings differences between short and tall individuals are substantial. Short paid employees—first quartile of height—earn 15.5 Euros per hour whereas tall paid employees—third quartile of height—earn 16.5 Euros per hour; in self-employment the earnings are 12.8 and 14.4 Euros per hour, respectively. Another novel finding is that we establish the existence of a height premium for work and life satisfaction, but only for paid employees. Finally, our analysis reveals that 44% of the height premium in earnings is explained by differences in educational attainment whereas the height premium in work and life satisfaction is only marginally explained by education.

Suggested Citation

  • Cornelius A. Rietveld & Jolanda Hessels & Peter van der Zwan, 2014. "The Stature of the Self-employed and its Premium," Tinbergen Institute Discussion Papers 14-109/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20140109
    as

    Download full text from publisher

    File URL: https://papers.tinbergen.nl/14109.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Blanchflower, David G., 2000. "Self-employment in OECD countries," Labour Economics, Elsevier, vol. 7(5), pages 471-505, September.
    2. de Wit, Gerrit, 1993. "Models of Self-Employment in a Competitive Market," Journal of Economic Surveys, Wiley Blackwell, vol. 7(4), pages 367-397, December.
    3. Milo Bianchi, 2012. "Financial Development, Entrepreneurship, and Job Satisfaction," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 273-286, February.
    4. Case, Anne & Paxson, Christina & Islam, Mahnaz, 2009. "Making sense of the labor market height premium: Evidence from the British Household Panel Survey," Economics Letters, Elsevier, vol. 102(3), pages 174-176, March.
    5. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    6. Alesina, Alberto & Di Tella, Rafael & MacCulloch, Robert, 2004. "Inequality and happiness: are Europeans and Americans different?," Journal of Public Economics, Elsevier, vol. 88(9-10), pages 2009-2042, August.
    7. Jagannadha Tamvada, 2010. "Entrepreneurship and welfare," Small Business Economics, Springer, vol. 34(1), pages 65-79, January.
    8. Tao, Hung-Lin, 2014. "Height, weight, and entry earnings of female graduates in Taiwan," Economics & Human Biology, Elsevier, vol. 13(C), pages 85-98.
    9. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521728355, March.
    10. Simeon Djankov & Yingyi Qian & Gerard Roland & Ekaterina Zhuravskaya, 2006. "Entrepreneurship in Brazil, China, and Russia," Working Papers w0066, Center for Economic and Financial Research (CEFIR).
    11. Bruno S. Frey & Alois Stutzer, 2002. "What Can Economists Learn from Happiness Research?," Journal of Economic Literature, American Economic Association, vol. 40(2), pages 402-435, June.
    12. Clark, Andrew E. & Oswald, Andrew J., 1996. "Satisfaction and comparison income," Journal of Public Economics, Elsevier, vol. 61(3), pages 359-381, September.
    13. Deaton, Angus & Arora, Raksha, 2009. "Life at the top: The benefits of height," Economics & Human Biology, Elsevier, vol. 7(2), pages 133-136, July.
    14. Fershtman, Chaim & Weiss, Yoram, 1993. "Social Status, Culture and Economic Performance," Economic Journal, Royal Economic Society, vol. 103(419), pages 946-959, July.
    15. Matthias Benz & Bruno S. Frey, 2008. "Being Independent is a Great Thing: Subjective Evaluations of Self‐Employment and Hierarchy," Economica, London School of Economics and Political Science, vol. 75(298), pages 362-383, May.
    16. Andre van Stel, "undated". "COMPENDIA: Harmonizing business ownership data across countries and over time," Papers on Entrepreneurship, Growth and Public Policy 2005-05, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
    17. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2004. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1019-1053, October.
    18. Bas ter Weel, 2008. "The Noncognitive Determinants of Labor Market and Behavioral Outcomes: Introduction to the Symposium," Journal of Human Resources, University of Wisconsin Press, vol. 43(4).
    19. Anne Case & Christina Paxson, 2008. "Stature and Status: Height, Ability, and Labor Market Outcomes," Journal of Political Economy, University of Chicago Press, vol. 116(3), pages 499-532, June.
    20. Earle, John S. & Sakova, Zuzana, 2000. "Business start-ups or disguised unemployment? Evidence on the character of self-employment from transition economies," Labour Economics, Elsevier, vol. 7(5), pages 575-601, September.
    21. José Millán & Jolanda Hessels & Roy Thurik & Rafael Aguado, 2013. "Determinants of job satisfaction: a European comparison of self-employed and paid employees," Small Business Economics, Springer, vol. 40(3), pages 651-670, April.
    22. repec:pri:cheawb:case_paxson_stature_status_8312006.pdf is not listed on IDEAS
    23. Martin Binder & Alex Coad, 2013. "Life satisfaction and self-employment: a matching approach," Small Business Economics, Springer, vol. 40(4), pages 1009-1033, May.
    24. Andersson, Pernilla, 2008. "Happiness and health: Well-being among the self-employed," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 37(1), pages 213-236, February.
    25. repec:pri:cheawb:case_paxson_stature_status_8312006 is not listed on IDEAS
    26. Simon C. Parker & Mirjam Van Praag, 2010. "Group Status and Entrepreneurship," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(4), pages 919-945, December.
    27. Andreas Schick & Richard H. Steckel, 2010. "Height as a Proxy for Cognitive and Non-Cognitive Ability," NBER Working Papers 16570, National Bureau of Economic Research, Inc.
    28. Parker,Simon C., 2009. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9780521899604, March.
    29. repec:dau:papers:123456789/5067 is not listed on IDEAS
    30. Erik Lindqvist, 2012. "Height and Leadership," The Review of Economics and Statistics, MIT Press, vol. 94(4), pages 1191-1196, November.
    31. Nicola Persico & Andrew Postlewaite & Dan Silverman, 2001. "The Effect of Adolescent Experience on Labor Market Outcomes: The Case of Height, Third Version," PIER Working Paper Archive 04-013, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania, revised 15 Mar 2004.
    32. repec:pri:indrel:case_paxson_stature_status_8312006 is not listed on IDEAS
    33. Hübler, Olaf, 2009. "The nonlinear link between height and wages in Germany, 1985-2004," Economics & Human Biology, Elsevier, vol. 7(2), pages 191-199, July.
    34. repec:pri:indrel:case_paxson_stature_status_8312006.pdf is not listed on IDEAS
    35. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Khasnobis, Poulomi & Dinda, Soumyananda, 2017. "Height differentiated Wage Premium in West Bengal, India: An Empirical Study," MPRA Paper 89600, University Library of Munich, Germany, revised Mar 2017.
    2. Mesfin Mulu Ayalew & Shumet Amare Zeleke, 2018. "Modeling the impact of entrepreneurial attitude on self-employment intention among engineering students in Ethiopia," Journal of Innovation and Entrepreneurship, Springer, vol. 7(1), pages 1-27, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rietveld, Cornelius A. & Hessels, Jolanda & van der Zwan, Peter, 2015. "The stature of the self-employed and its relation with earnings and satisfaction," Economics & Human Biology, Elsevier, vol. 17(C), pages 59-74.
    2. Jolanda Hessels & José María Millán & Concepción Román, 2015. "The Importance of Being in Control of Business: Work Satisfaction of Employers, Own-account Workers and Employees," Tinbergen Institute Discussion Papers 15-047/VII, Tinbergen Institute.
    3. Binder, Martin & Blankenberg, Ann-Kathrin, 2021. "Self-employment and subjective well-being," University of Göttingen Working Papers in Economics 411, University of Goettingen, Department of Economics.
    4. van der Zwan, Peter & Hessels, Jolanda & Rietveld, Cornelius A., 2018. "Self-employment and satisfaction with life, work, and leisure," Journal of Economic Psychology, Elsevier, vol. 64(C), pages 73-88.
    5. Martin Binder, 2017. "Entrepreneurial Success and Subjective Well-Being: Worries about the Business Explain One's Well-Being Loss from Self-Employment," SOEPpapers on Multidisciplinary Panel Data Research 947, DIW Berlin, The German Socio-Economic Panel (SOEP).
    6. Odermatt, Reto & Powdthavee, Nattavudh & Stutzer, Alois, 2021. "Are newly self-employed overly optimistic about their future well-being?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 95(C).
    7. Peter van der Zwan & Jolanda Hessels & Cornelius A. Rietveld, 2015. "The Pleasures and Pains of Self-Employment: A Panel Data Analysis of Satisfaction with Life, Work, and Leisure," Tinbergen Institute Discussion Papers 15-099/VII, Tinbergen Institute.
    8. José Millán & Jolanda Hessels & Roy Thurik & Rafael Aguado, 2013. "Determinants of job satisfaction: a European comparison of self-employed and paid employees," Small Business Economics, Springer, vol. 40(3), pages 651-670, April.
    9. Martin Binder & Alex Coad, 2014. "How satisfied are the self-employed? A life domain view," SPRU Working Paper Series 2014-17, SPRU - Science Policy Research Unit, University of Sussex Business School.
    10. Clemens Hetschko, 2016. "On the misery of losing self-employment," Small Business Economics, Springer, vol. 47(2), pages 461-478, August.
    11. Aguilar, Alexandra Cortés & García Muñoz, Teresa M. & Moro-Egido, Ana I., 2013. "Heterogeneous self-employment and satisfaction in Latin America," Journal of Economic Psychology, Elsevier, vol. 39(C), pages 44-61.
    12. Dominik Hanglberger & Joachim Merz, 2015. "Does self-employment really raise job satisfaction? Adaptation and anticipation effects on self-employment and general job changes," Working Papers 385, ECINEQ, Society for the Study of Economic Inequality.
    13. Nikolova, Milena, 2018. "Self-Employment Can Be Good for Your Health," GLO Discussion Paper Series 226, Global Labor Organization (GLO).
    14. Nikolova, Milena, 2019. "Switching to self-employment can be good for your health," Journal of Business Venturing, Elsevier, vol. 34(4), pages 664-691.
    15. Roy Thurik, 2014. "Entrepreneurship and the business cycle," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-90, October.
    16. Mirjam Praag & André Stel, 2013. "The more business owners, the merrier? The role of tertiary education," Small Business Economics, Springer, vol. 41(2), pages 335-357, August.
    17. Pham, Tho & Talavera, Oleksandr & Zhang, Mao, 2018. "Self-employment, financial development, and well-being: Evidence from China, Russia, and Ukraine," Journal of Comparative Economics, Elsevier, vol. 46(3), pages 754-769.
    18. Michael Fritsch & Alina Sorgner & Michael Wyrwich, 2021. "Types of institutions and well-being of self-employed and paid employees in Europe," Small Business Economics, Springer, vol. 56(2), pages 877-901, February.
    19. Pakura, Stefanie, 2015. "Unternehmerische Motivation und Wiedergründungsbereitschaft: Eine empirische Untersuchung deutscher Unternehmensneugründungen in der Frühentwicklungsphase," Lüneburger Beiträge zur Gründungsforschung 10, Leuphana University of Lüneburg, Department of Entrepreneurship & Start-up Management.
    20. Shashwati Banerjee & Kishor Goswami, 2020. "Self-employed or Paid Employed: Who can Earn more among the Slum Dwellers and Why?," Progress in Development Studies, , vol. 20(1), pages 7-25, January.

    More about this item

    Keywords

    Self-employment; Stature; Height premium; Education; Life satisfaction;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tin:wpaper:20140109. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tinbergen Office +31 (0)10-4088900 (email available below). General contact details of provider: https://edirc.repec.org/data/tinbenl.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.