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Does working at a start-up pay off?

Author

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  • Fackler, Daniel
  • Hölscher, Lisa
  • Schnabel, Claus
  • Weyh, Antje

Abstract

Using representative linked employer-employee data for Germany, this paper analyzes short- and long-run differences in labor market performance of workers joining start-ups instead of incumbent firms. Applying entropy balancing and following individuals over ten years, we find huge and long-lasting drawbacks from entering a start-up in terms of wages, yearly income, and (un)employment. These disadvantages hold for all groups of workers and types of start-ups analyzed. Although our analysis of different subsequent career paths highlights important heterogeneities, it does not reveal any strategy through which workers joining start-ups can catch up with the income of similar workers entering incumbent firms.

Suggested Citation

  • Fackler, Daniel & Hölscher, Lisa & Schnabel, Claus & Weyh, Antje, 2020. "Does working at a start-up pay off?," Discussion Papers 112, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  • Handle: RePEc:zbw:faulre:112
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    References listed on IDEAS

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    Cited by:

    1. Kovalenko, Tim & Sauerbier, Timo & Schröpf, Benedikt, 2023. "The fall and rebound of average establishment size in West Germany," Discussion Papers 126, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.

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    More about this item

    Keywords

    startups; young firms; wages; linked employer-employee data;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M51 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Firm Employment Decisions; Promotions

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