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Title:Becoming an entrepreneur PDF Logo
Authors:Ñopo, Hugo
Valenzuela, Patricio
Issue Date:2007
Series/Report no.:Working paper // Inter-American Development Bank, Research Department 605
Abstract:Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a differencein-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few 'superstar winners'. Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch.
Subjects:difference-in-differences
non-parametric matching
micro-enterprises
JEL:J16
J31
J41
Document Type:Working Paper
Appears in Collections:Research Department Working Papers, Inter-American Development Bank

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