Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/64023
Authors: 
Hyytinen, Ari
Rouvinen, Petri
Year of Publication: 
2008
Series/Report no.: 
ETLA Discussion Papers, The Research Institute of the Finnish Economy (ETLA) 1129
Abstract: 
We examine how those re-entering paid-employment after a brief self-employment spell fare upon return using data from the European Community Household Panel. Unconditionally, those re-entering paid-employment appear to have considerably lower wages than those staying in the wage sector. This difference appears to be larger in Europe than in the US. Conditional analysis suggests, however, that the difference is more apparent than real : It seems that Europeans select negatively into (and possibly out-of) self-employment, i.e., the likelihood of entering (and exiting) entrepreneurship correlates negatively with unobserved ability and/or in-paid-employment productivity. Our analysis of non-wage outcomes indicates that the selection is mostly involuntary and that for highly educated men, the brief self-employment spells are unemployment in disguise.
Subjects: 
self-employment
job mobility
earnings
wage differentials
selection
JEL: 
J23
J24
J31
Document Type: 
Working Paper

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