The entrepreneurship premium
Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the po...
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| Format: | Article |
| Language: | English |
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Springer New York LLC
2019
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| Online Access: | View Fulltext in Publisher |
| Summary: | Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents. The paper also shows that in an otherwise standard occupational choice setting, the entrepreneurship premium rises with entrepreneurial scarcity and falls with their span of control. Finally, liquidity constraints on startups raise the entrepreneurship premium by lowering the equilibrium wage. © 2019, The Author(s). |
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| ISBN: | 0921898X (ISSN) |
| DOI: | 10.1007/s11187-019-00234-w |