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Title:A selection-based theory of the transition from employment to entrepreneurship: the role of employer size PDF Logo
Authors:Parker, Simon C.
Issue Date:2006
Series/Report no.:IZA Discussion Papers 2071
Abstract:A simple occupational choice model is used to predict that entrepreneurs who found new firms are more likely to work for small than for large firms prior to start-up. The mechanism underlying the result is heterogeneous risk aversion. The model also predicts a positive association between new firm formation and previous self-employment experience. These predictions accord with previous empirical findings, but notably self-selection rather than productivity effects can explain them.
Subjects:entrepreneurship
occupational choice
firm size
JEL:J21
J23
J62
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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