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From complements to substitutes: Structural breaks in the elasticity of substitution between paidemployment and self-employment in the US

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  • Emilio Congregado
  • Vicente Esteve
  • Antonio A. Golpe

Abstract

This paper provides estimates of the elasticity of substitution between operational and managerial jobs in the US economy during the years 1969- 2011. Estimating the long-term relationship between the aggregate employment/self-employment ratio and the returns from paid-employment relative to self-employment and testing for structural breaks, we report different estimates of the elasticity of substitution in each of the three regimes identified. Our results help to understand and interpret one of the most intriguing aspects in the evolution of self-employment rates in developed countries.

Suggested Citation

  • Emilio Congregado & Vicente Esteve & Antonio A. Golpe, 2013. "From complements to substitutes: Structural breaks in the elasticity of substitution between paidemployment and self-employment in the US," Working Papers 09/13, Instituto Universitario de Análisis Económico y Social.
    • Handle: RePEc:uae:wpaper:0913
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    References listed on IDEAS

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    More about this item

    Keywords

    Elasticity of substitution; Cointegration; Self-employment; Structural Breaks;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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