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Title: Some Empirical Aspects of Entrepreneurship
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Evans, David S. Leighton, Linda S. |
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Some Empirical Aspects of Entrepreneurship American Economic Review 79,3 (June 1989): 519-535. Also: http://www.jstor.org/stable/1806861 Cohort(s): Young Men Publisher: American Economic Association Keyword(s): Assets; Census of Population; Educational Returns; Internal-External Attitude; Life Cycle Research; Locus of Control (see Rotter Scale); Rotter Scale (see Locus of Control); Self-Employed Workers; Work Histories Permission to reprint the abstract has not been received from the publisher. Using data on full-time self-employed workers from the NLS of Young Men, coupled with CPS data, this report examines self-employment entry and exit over the life cycle and focuses on the relative returns to business and wage experience and education of self-employment vs wage work. Key findings include: (1) The probability of switching into self-employment is roughly independent of age and total labor-market experience. This result is not consistent with standard job-shopping models such as William Johnson (1978) and Robert Miller (1984) which predict that younger workers will try riskier occupations first. (2) The probability of departing from self-employment decreases with duration of self-employment, falling from about 10 percent in the early years to 0 by the eleventh year in self-employment. About half of the entrants return to wage work within seven years. (3) The fraction of the labor force that is self-employed increases with age until the early 40s and then remains constant within the retirement years. (4) Men with greater assets are more likely to switch into self-employment all else equal. (5) Wage experience has a much smaller return in self-employment than in wage work while business experience has just about the same return in wage work as in self-employment. (6) Poorer wage workers - that is, unemployed workers, lower-paid wage workers, and men who have changed jobs a lot - are more likely to enter self-employment or to be self-employed at a point in time, all else equal. (7) As predicted by one of the leading psychological theories, men who believe their performance depends largely on their own actions - that is, have an internal locus of control as measured by a test known as the Rotter Scale - have a greater propensity to start businesses. |
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Bibliography Citation
Evans, David S. and Linda S. Leighton. "Some Empirical Aspects of Entrepreneurship." American Economic Review 79,3 (June 1989): 519-535.
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