What is Left to Residual Claimants? The Empirics of Income Reported by Entrepreneurs and Workers
Using Finnish panel data, we study how entrepreneurs differ from workers in education and income dynamics. We find that workers have higher median income in all educational groups. Without additional controls, entrepreneurs have higher average income with all but undergraduate level of education. However, random effects and matching models suggest that entrepreneurs have lower incomes. We also analyze those who changed careers. Those with higher level of education are more likely to switch from entrepreneurship to workers, while education does not explain, in a statistically significant level, switching from being worker to entrepreneurship.
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- Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, vol. 87(4), pages 719-48, August.
- Tomi Kyyrä, 1999. "Post-Unemployment Wages and Economic Incentives to Exit from Unemployment," Research Reports 56, Government Institute for Economic Research Finland (VATT).
- Aki Kangasharju & Sari Pekkala, 2001. "The Role of Education in Self-Employment Success," Studies in Economics 0116, School of Economics, University of Kent.
- A. D. Roy, 1951. "Some Thoughts On The Distribution Of Earnings," Oxford Economic Papers, Oxford University Press, vol. 3(2), pages 135-146.
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