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The entrepreneurial earnings puzzle: Mismeasurement or real?

Abstract : A review of recent evidence on relative earnings from entrepreneurship versus wage work presents a puzzle: why do individuals become entrepreneurs when entrepreneurs on average apparently earn less than employees? After considering several potential explanations, we empirically analyze one: income underreporting by entrepreneurs. Using a nationwide panel survey representing U.S. households over 15 years, we estimate that entrepreneurs on average earn 4% less per year than employees. However, after correcting for income underreporting, the mean financial gain to entrepreneurship is positive and large, greater than 42%. However, we show that this estimate is built on some unpalatable model assumptions.
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Contributor : Antoine Haldemann Connect in order to contact the contributor
Submitted on : Saturday, June 1, 2013 - 7:03:16 PM
Last modification on : Saturday, June 25, 2022 - 10:54:37 AM





Thomas B. Astebro, Jing Chen. The entrepreneurial earnings puzzle: Mismeasurement or real?. Journal of Business Venturing, Elsevier, 2014, 29 (1), pp.88-105. ⟨10.1016/j.jbusvent.2013.04.003⟩. ⟨hal-00829057⟩



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