Selection into entrepreneurship and self-employment

Levine, Ross and Rubinstein, Yona Zvi ORCID: 0009-0000-5274-0252 (2020) Selection into entrepreneurship and self-employment. CEP Discussion Papers (CEPDP1722). London School of Economics and Political Science. Centre for Economic Performance, London, UK.

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Abstract

We study the effects of ability and liquidity constraints on entrepreneurship. We develop a three sector Roy model that differentiates between entrepreneurs and other self-employed to address puzzling gaps that have emerged between theory and evidence on entry into entrepreneurship. The model predicts—and the data confirm—that entrepreneurs are positively selected on highly-remunerated cognitive and non-cognitive human capital skills, but other self-employed are negatively selected on those same abilities; entrepreneurs are positively selected on collateral, but other self-employed are not; and entrepreneurship is procyclical, but self-employment is countercyclical.

Item Type:	Monograph (Discussion Paper)
Official URL:	https://cep.lse.ac.uk/_new/publications/discussion...
Additional Information:	© 2020 The Author(s)
Divisions:	Management
Subjects:	H Social Sciences > HC Economic History and Conditions H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HB Economic Theory
JEL classification:	J - Labor and Demographic Economics > J2 - Time Allocation, Work Behavior, and Employment Determination and Creation; Human Capital; Retirement > J24 - Human Capital; Skills; Occupational Choice; Labor Productivity G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations; Cycles L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L20 - General
Date Deposited:	18 Jan 2021 10:39
Last Modified:	14 Sep 2024 04:12
URI:	http://eprints.lse.ac.uk/id/eprint/108462

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