Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/67175 
Year of Publication: 
2012
Series/Report no.: 
IZA Discussion Papers No. 6844
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
Extant evidence that the self-employed overestimate their returns by more than employees do is consistent with two mutually inclusive possibilities. Self-employment may generate optimism or optimists may be drawn to self-employment. This paper finds that employees who will be self-employed in the future overestimate their short-run financial wellbeing by more than those who never become self-employed. When actually self-employed they are even more optimistic. Employees aspiring to start their own business are also of above average optimism. Cross-sectional findings are therefore an amalgam of psychological disposition and environmental factors, as theory requires if optimism is to be a causal influence on entrepreneurship.
Subjects: 
financial optimism
expectations
self-employment
JEL: 
D84
M13
Document Type: 
Working Paper

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