Self-employment and well-being across institutional contexts

This paper investigates whether the relationship between a person's occupational status and well-being differs across countries with varying institutional contexts. We find that the relationship between job and life satisfaction of self-employed people as well as of paid employees varies considerably across countries. Our results indicate that entrepreneurship-friendly institutions in a country are conducive to the well-being of those who are self-employed. Remarkably, the quality of entrepreneurial institutions also increases the levels of well-being of paid employees, but the effect is more pronounced for the self-employed.     

Life satisfaction and self-employment: a matching approach

Despite lower incomes, the self-employed consistently report higher satisfaction with their jobs. But are self-employed individuals also happier, more satisfied with their lives as a whole? High job satisfaction might cause them to neglect other important domains of life, such that the fulfilling job crowds out other pleasures, leaving the individual on the whole not happier than others. Moreover, self-employment is often chosen to escape unemployment, not for the associated autonomy that seems to account for the high job satisfaction. We apply matching estimators that allow us to better take into account the above-mentioned considerations and construct an appropriate control group (in terms of balanced covariates). Using the BHPS dataset that comprises a large nationally representative sample of the British populace, we find that individuals who move from regular employment into self-employment experience an increase in life satisfaction (up to 2 years later), while individuals moving from unemployment to self-employment are not more satisfied than their counterparts moving from unemployment to regular employment. We argue that these groups correspond to “opportunity” and “necessity” entrepreneurship, respectively. These findings are robust with regard to different measures of subjective well-being as well as choice of matching variables, and also robustness exercises involving “simulated confounders”.     

Entrepreneurial Aspirations: Another Form of Job Search?

We study the labour market behaviour of employed individuals that have entrepreneurial aspirations in addition to aspirations to switch job. We analyze empirically these two “search processes” side-by-side and find that entrepreneurial aspirations and aspirations to switch job are relatively common. However, most employees are not engaged in both search processes, nor are the two processes alike: It is more difficult to empirically explain entrepreneurial aspirations than aspirations to switch job. Only few observable characteristics of the employed are related to both processes. Varied experience and job dissatisfaction are directly related to the probability of having entrepreneurial aspirations and aspirations to switch job, while job tenure is inversely related to them. Our analysis also contributes to the understanding of the process of transition from work into entrpreneurship: Employees who can experiment with new things in their present job, regard the content of their work important, and are dissatisfied with their superiors have more often entrepreneurial aspirations than others.     

Ageing and entrepreneurial preferences

Previous research on age and entrepreneurship assumed homogeneity and downplayed age-related differences in the motives and aims underlying enterprising behaviour. We argue that the heterogeneity of entrepreneurship influences how the level of entrepreneurial activity varies with age. Using a sample of 2,566 respondents from 27 European countries, we show that entrepreneurial activity increases almost linearly with age for individuals who prefer to only employ themselves (self-employers), whereas it increases up to a critical threshold age (late 40s) and decreases thereafter for those who aspire to hire workers (owner-managers). Age has a considerably smaller effect on entrepreneurial behaviour for those who do not prefer self-employment but are pushed into it by lack of alternative employment opportunities (reluctant entrepreneurs). Our results question the conventional wisdom that entrepreneurial activity declines with age and suggest that effective responses to demographic changes require policy makers to pay close attention to the heterogeneity of entrepreneurial preferences.     

Inequality and entrepreneurial thresholds

We explore the relationship between inequality and entrepreneurial activity. Drawing on cross-sectional data from a largescale survey of the economic conditions of individuals across India, we develop a number of dimensions of inequality to explore empirically how inequality interacts with entrepreneurship, operationalized as self-employment or as employing other people. We find compelling evidence that there are thresholds to becoming self-employed, and even more so to assembling the combinations of resources and personal attributes required to become an employer. Greater inequality leaves more people unable to make the transition to self-employment, leaving casual laboring as the occupation of necessity. At the same time, inequality increases the number of employers in a society, by concentrating resources - particularly land and finance - enough for significant numbers of people to be able to cross this higher threshold. Lastly, greater differentiation into social or religious groups curtails the ability to cross either entrepreneurial threshold, presumably by limiting the extent and benefits of social networks of value for entrepreneurship.     

Job satisfaction and self-employment: autonomy or personality?

Most studies in the economics discourse argue that the impact of self-employment on job satisfaction is mediated by greater procedural freedom and autonomy. Values and personality traits are considered less likely to explain the utility difference between self-employed and salaried workers. Psychology scholars suggest that entrepreneurial satisfaction also depends, at least in part, on specific values and personality traits. Utilising a large dataset derived from the 2006 European Social Survey, this study performs a complementary analysis by taking personality traits, personal values and indicators for workers’ autonomy explicitly into account. The empirical findings add further strength to economists’ argument that, net of values and personality traits, autonomy and independence are the mechanisms by which self-employment leads to higher levels of job satisfaction. These results hold true for both male and female sub-samples even when a multitude of socio-demographic characteristics, personal values and personality traits are controlled for.     

The effect of working time preferences and fair wage perceptions on entrepreneurial intentions among employees

To date, little is known about how working time preferences and fair wage perceptions affect employees’ entrepreneurial intentions. Using data from the German Socio-Economic Panel Study, we provide first evidence that the difference between the actual and desired amount of working hours in paid employment is positively related to the propensity to switch to self-employment. Furthermore, our analysis supports the hypothesis that employees who perceive their current wage level as very unfair are more likely to have higher entrepreneurial intentions. However, the closer actual wages get to the wage levels perceived as fair, the more employees are likely to remain in their current employment situation. We also tested the interaction effect of working time preferences and fair wage perceptions. In line with our theoretical considerations, we find that employees who perceive their wages as unfair and, simultaneously, prefer different work hours have the strongest entrepreneurial intentions.     

Duration of Self-employment in Developing Countries: Evidence from Small Enterprises in Zimbabwe

The duration of self-employment is an important policy consideration in developing countries. We use data from a sample of the self-employed in Zimbabwe to compute hazard rates by location and economic sector of the activity. We partition the data by date of entry to assess the impact of economic liberalization measures. Our results show that cost of finance, along with location and sector to be important variables in explaining duration. We then partition our sample in order to control for the effects of location, year of entry and type of activity. Our sub-samples thus consist of individuals facing the same history of macroeconomic trends in similar locations and activities. The results show that personal characteristics are significant in explaining differences between individuals in the duration of self-employment.     

Negative emotions of an entrepreneurial career: Self-employment and regulatory coping behaviors

Although we know a great deal about the relationship between self-employment and the experience of positive emotions such as passion, excitement, happiness, satisfaction, and flow, there is some research that suggests that the self-employed may be more susceptible than employees to negative emotions such as stress, fear of failure, loneliness, mental strain, and grief. We draw on the literature on role requirements to develop a model of career pursuit based on individuals' willingness and abilities to regulate these emotions. Using a nation-wide survey of more than 2700 US citizens we show that over and above the effects of positive emotions, the self-employed experienced fewer negative emotions than those who are employed, contingent on their regulatory coping behaviors. We discuss implications of these results for the literature on entrepreneurial emotions.     

Labour market institutions,learning and self-employment

We develop a dynamic partial-equilibrium model to analyse how labour market institutions (wage compression, minimum wages, unemployment benefits, mobility costs and fixed-costs of self-employment) and learning affect who and when people become self-employed. We find that certain ability groups of workers become self-employed for both “carrot” and “stick” reasons: Some prefer self-employment to the low institutionalised wage, while others are not productive enough to qualify for a job at the institutionalised wage. Furthermore, wage compression and learning may give rise to a class of switchers who start in wage employment and later switch to self-employment. Several predictions of the model are consistent with observed empirical regularities, such as the existence of a group of low-skilled self-employed workers, the increasing propensity for self-employment over age groups and the larger spread in earnings among self-employed.     

Is self-employment really a bad experience? : The effects of previous self-employment on subsequent wage-employment wages

We use propensity score matching methods to quantify the effects of past self-employment experience on subsequent earnings in dependent employment using data on the population of Danish men observed between 1990 and 1996. Our results generally confirm existing studies in that we find that a spell of self-employment is associated with lower hourly wages compared to workers who were consecutively wage-employed. We also show, however, that this effect disappears—and even becomes positive in some settings—for formerly self-employed who find dependent employment in the same sector as their self-employment sector. Hence, the on average negative effect of self-employment is rather caused by sector switching than by the self-employment experience per se. Moreover, formerly self-employed who either enjoyed a high income or hired at least one worker during their self-employment spell receive wages in subsequent dependent employment that are at least as high as for individuals who have been consecutively wage-employed.     

Why the self-employed are happier: Evidence from 25 European countries

Using survey data from 25 European countries, we can show that in most of the countries the self-employed are more satisfied with their jobs than employees. This paper aims to discuss the reasons why this is the case. The results show that part of the differences in job satisfaction between employees and self-employed individuals are due to creativity and autonomy in self-employment. This suggests that our results are in line with procedural utility theory ( and ). In other words, especially self-employed individuals seem to derive utility from the way outcomes are achieved.     

The Winner’s Curse of Human Capital

We extend a model developed by Evans and Jovanovic (1989) to explain when start-ups are credit constrained. We show that the magnitude of the credit constraint is conditioned by the relative productivity of human capital in both wage work and self-employment. The effect of predicted household income on start-up capital is used to indicate the existence of financial constraint. Empirical analysis reveals that entrepreneurs with high human capital have both greater financial wealth and greater levels of start-up capital pointing to the endogenous nature of credit constraints. High human capital relaxes financial constraints, apparently due to greater productivity of human capital in wage work than in self-employment. Those who are the least likely to be credit constrained in self-employment are those that are least likely to switch into self-employment,and vice versa.     

Intergenerational ethnic enclave influences on the likelihood of being self-employed

How does the experience of living in an ethnic enclave during formative years influence the propensity to be self-employed? This study examines the intergenerational influence of exposure to self-employed, co-ethnic neighbors on the likelihood that racial or ethnic minorities will become self-employed. The paper develops a model of factors that influence self-employment likelihood, including intergenerational co-ethnic predictors, and tests them through an analysis of respondents to the 2000 U.S. Census long-form survey (i.e., IPUMS). Results show that higher levels of exposure to entrepreneurial co-ethnics in the parent's generation have a strong impact on self-employment likelihood.     

Self-employment and allostatic load

Self-employment can be stressful and its long-term effects on individual health could be significant; yet, the physiological outcomes of self-employment related stress remain under-explored. Drawing on allostatic load as a long-term biological consequence of physiological wear-and-tear and an indicator of stress response, we use three different studies to provide a more nuanced understanding of the relationship between self-employment and physiological outcomes. In Study 1, based on a sample of 194 self-employed and 1511 employed individuals, we find that self-employment is marginally related to allostatic load and allostatic load marginally mediates the relationship between self-employment and physical, but not mental, health. Study 2, based on a sample of 776 self-employed and 8003 employed individuals, extends these findings, and provides evidence that those who are self-employed for longer periods have a higher allostatic load. Finally, in Study 3 we draw on a sample of 174 twins and, consistent with Study 2, show that those reporting self-employment in two waves (about eight years apart) had a higher allostatic load, however, when leveraging problem-focused coping such individuals experienced lower allostatic load. Taken together, these three studies extend our understanding of the relationship between self-employment and wellbeing.     

The determinants of changes in U.S. self-employment, 1968–1987

Summary The self-employment rate depends on the distribution of full-time workers across ages, educational levels, and industries and on tax rates and business conditions. About 90 percent of the variation in self-employment across time and across age groups is explained by these factors. Swings in the self-employment rate over time result from the interplay of changes in these factors. The entry of the baby-boom generation into the labor-force beginning in the later 1960s has led to a decrease in the average age of the full-time nonagricultural workforce and has tended to decrease the self-employment rate. The secular decline of manufacturing, the secular rise of services, and secular increases in educational levels have tended to increase the self-employment rate. Fluctuations in business conditions and tax rates have also affected the self-employment rate. The evidence reported here suggests that self-employment is procyclical, although not strongly so. Increases in effective federal income during the late 1970s tended to increase self-employment rates while decreases during the Reagan years tended to decrease self-employment rates.These findings are helpful for speculating about the answers to three important questions. First, are people more entrepreneurial than they used to be? The fact that the ebb and flow of self-employment over time can be explained almost entirely by structural changes in the economy suggests that people with given demographic characteristics and morking in particular industries have not become more likely to try entrepreneurship²⁸.Second, did the supply of entrepreneurs increase during the Reagan years? The answer is yes and no²⁹. The number of people who operate full-time businesses has certainly increased: from 5.99 million in 1981 to 6.46 million in 1985. The absolute supply of entrepreneurs has risen. But the number of people who are full-time wage workers has also increased: from 65.2 million in 1981 to 71.6 million in 1985. The fraction of workers who operate businesses has fallen: it increased from 9.3 percent in 1981 to a peak of 10.0 percent in 1983 and then fell to 9.1 percent in 1985. The relative supply of entrepreneurs has thus fallen. Ironically, one of the many causes for the decline in the relative supply of entrepreneurs was the decrease in tax rates that were, according to supply-side advocates, supposed to have increased entrepreneurship³⁰.Third, will we see rising or falling self-employment in the coming decade? Predicting future rates of self-employment is treacherous because these rates depend upon many factors. The aging of the baby-boom generation will by itself lead to sharply increasing rates of self-employment as the baby-boomers, who started turning 40 in 1985, pass through the peak years of self-employment. This upward trend may be offset by a number of more fragile structural changes in the economy. The sharp decline of the dollar may reinvigorate manufacturing at the expense of services. If so, self-employment will decline. Further lowering of federal income tax rates may reduce the gains from tax-avoidance through self-employment and thereby impart a further downward trend in self-employment rates. Other changes that have helped increase self-employment may have run their course. Female labor-force participation rates and educational levels among both men and women may have reached a plateau. If so, these factors will cease to be a factor in changing self-employment rates.This paper has analyzed the determinants of changes in the aggregate rate of self-employment across age cohorts. When examining aggregate rates of self-employment we have ignored more subtle questions concerning why particular individuals choose to try self-employment at particular times in their careers and what makes a successful entrepreneur. These questions await future research.We would like to thank Jules Lichtenstein and Edward Starr for helpful comments and suggestions.     

Black–White gap in self-employment. Does intra-race heterogeneity exist?

Past research on the determinants of self-employment in the United States has emphasized the importance of ethnicity. In particular, self-employment rates for Blacks lag far behind those of other racial groups for comparable individuals. This research examines two related issues: Does the dummy variable coefficient associated with the Black–White self-employment gap exhibit intra-race heterogeneity? Second, does this variable have diminished or increased impact across generations? We decompose the sample into subgroups and find that the size of the Black–White self-employment gap varies within subgroups of African-Americans.     

城乡居民幸福测量的结构方程模型

文章采用浙江城乡居民幸福感调查的样本数据,用因子分析方法探究影响居民幸福的主要因素,用结构方程模型研究各因素内部及相互之间的关系,建立了居民幸福指数三级测量指标体系,测算出了居民幸福单项指数、影响因子指数和总指数,得到结论如下：居民幸福指数由健康生活、工作保障、生活环境、社会环境、生活满意、未来信心六个因子构成,其薄弱点主要在体现在社会环境、工作保障和生活环境三大方面的因子上,并在此基础上提出相应的政策建议。     

Entrepreneurship and welfare

Here, I examine returns to entrepreneurship using a standard measure of welfare, the per-capita consumption expenditure. This analysis, using quantile regressions, reveals the existence of a welfare hierarchy in occupations. The results suggest that, across the welfare distribution, entrepreneurs who employ others have the highest returns in terms of consumption, while those entrepreneurs who work for themselves, that is, self-employed individuals, have slightly lower returns than the salaried employees. However, self-employment entails higher returns than casual labor and a relative escape from poverty.     

Tax Policy and Entrepreneurship: New Time Series Evidence

Have tax policies affected entrepreneurial activity in the U.S.? We extend the time series literature on this topic by using more recent data and modern econometric techniques to examine the importance of federal income, payroll, capital gains, corporate income, and estate taxes on self-employment rates. Regression results show that most of these taxes have significant but small effects on self-employment activity. A battery of cointegration and causality tests confirms the general finding that taxes can have significant influences on entrepreneurship, but they are likely to be ineffective tools for generating meaningful changes in entrepreneurial activity.