Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2009-06-29
Revision-Date: 2009-07-23
Number: 09-055/3
Author-Name: Robin Douhan
Author-Workplace-Name: Research Institute of Industrial Economics (IFN) and Uppsala University
Author-Name: Mirjam van Praag
Author-Workplace-Name: University of Amsterdam, Amsterdam Center for Entrepreneurship, Max Planck Institute of Economics, IZA
Title: Entrepreneurship, Wage Employment and Control in an Occupational Choice Framework
Abstract: We combine two empirical observations in a general equilibrium occupational choice model. The first is that entrepreneurs have more control than employees over the employment of and accruals from assets, such as human capital. The second observation is that entrepreneurs enjoy higher returns to human capital than employees. We present an intuitive model showing that more control (observation 1) may be an explanation for higher returns (observation 2); its main outcome is that returns to ability are higher in higher control environments. This provides a theoretical underpinning for the control-based explanation for higher returns to human capital for entrepreneurs.
Classification-JEL: L26, I20, J24, J31
Keywords: Entrepreneurship, Ability, Occupational Choice, Human Capital, Wage Structure
File-Url: https://papers.tinbergen.nl/09055.pdf
File-Format: application/pdf
File-Size: 227681 bytes
Handle: RePEc:tin:wpaper:20090055