() and Lars-Göran Mattsson
Björn Hårsman: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, Postal: SE-100 44 Stockholm, Sweden
Lars-Göran Mattsson: Royal Institute of Technology, Department of Transport Science, Postal: SE-100 44 Stockholm, Sweden
Abstract: The paper deals with the selection into entrepreneurship and more precisely with Lazear’s model of occupational choice between entrepreneurship and paid employment. The basic aim is to show that lower expected income for entrepreneurs vs. wage-employed is fully compatible with Lazear’s assumption that the selection into entrepreneurship is based upon income maximization – there is no “return to entrepreneurship puzzle”. We will prove this by deriving the theoretical implications that follow from the assumption that skills are Fréchet distributed. Another aim is to shed some empirical light on the resulting theoretical results. This is done by using individual level data from the Swedish employment register for 2004-2008 to compute the parameters of the Fréchet distribution and the corresponding income distributions for self-owners and wage employed. The paper contributes to earlier literature by resolving the so called income paradox and by demonstrating the rich possibilities for empirical studies inherent in the Lazear model.
26 pages, July 7, 2017
Full text files
Questions (including download problems) about the papers in this series should be directed to Vardan Hovsepyan ()
Report other problems with accessing this service to Sune Karlsson ().
This page generated on 2018-01-23 23:31:37.