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Can working conditions explain the return-to-entrepreneurship puzzle?

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  • Lechmann, Daniel S. J.

Abstract

Most self-employed would apparently earn higher earnings if they were working in paid employment. One explanation for this 'return-to-entrepreneur-ship puzzle' could be that entrepreneurship entails substantial non-monetary bene-fits, such as autonomy, flexibility, and task variety. Utilizing German data and a de-composition analysis, this study examines the contribution of such working condi-tions to the observed earnings differential between self-employment and paid em-ployment. The results imply that working conditions differences do not contribute to resolve the return-to-entrepreneurship puzzle. Rather, (mis-)measurement of earnings seems to be an issue.

Suggested Citation

  • Lechmann, Daniel S. J., 2013. "Can working conditions explain the return-to-entrepreneurship puzzle?," Discussion Papers 86, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
  • Handle: RePEc:zbw:faulre:86
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    References listed on IDEAS

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    More about this item

    Keywords

    compensating differentials; Germany; returns to entrepreneurship; self-employment; working conditions;

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions

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