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Title:Entrepreneurship from Scratch: Lessons on the Entry Decision into Self-Employment from Transition Economies PDF Logo
Authors:Earle, John S.
Sakova, Zuzana
Issue Date:1999
Series/Report no.:IZA Discussion paper series 79
Abstract:This paper exploits the rapid rise in self-employment rates in post-communist Eastern Europe as a valuable ?quasi-experiment? for understanding the sources of entrepreneurship. A relative demand-supply model and an individual sectoral choice model are used to analyze a 1993 survey of 27,000 adults in six transition economies. Estimated selfemployment earnings premia are positive, and the data imply positive selection into both employee and self-employment status. Structural probit estimates show the probability of self-employment entry is unassociated with former Communist Party affiliation but positively related to schooling, pre-transition family income, receipt of property in restitution, precommunist family business-holding, and predicted earnings differential. Cross-country variation in predicted self-employment entry rates and relative earnings provide evidence on the demand and supply factors affecting the decision to become an entrepreneur.
small business
selection bias
structural probit Eastern Europe
Czech Republic
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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