Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/325067 
Year of Publication: 
2025
Series/Report no.: 
IZA Discussion Papers No. 18009
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
What motivates individuals to become entrepreneurs and create jobs? We develop and estimate a dynamic structural microeconometric model that accounts for both employer and non-employer entrepreneurs. Individuals in each period choose to work as an employee, as one of the two entrepreneur types, or remain non-employed. Different work experiences may affect earnings in the three sectors differently. The estimated model replicates key data patterns. The results suggest that experience in employment provides positive returns in entrepreneurship, but entrepreneurial experience does not have positive returns in employment. The model is used to simulate how policy scenarios would affect individuals' entrepreneurial choices.
Subjects: 
dynamic structural model
employer
entrepreneurship
life cycle
JEL: 
J22
J23
L26
C61
Document Type: 
Working Paper

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