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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.
Subjects:Entrepreneurship
self-employment
transition
small business
selection bias
structural probit Eastern Europe
Bulgaria
Czech Republic
JEL:J24
J23
O57
M13
J62
P2
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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