New evidence on the relationship between risk attitudes and self-employment

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. www.econstor.eu The Institute for the Study of Labor (IZA) in Bonn is a local and virtual international research center and a place of communication between science, politics and business. IZA is an independent nonprofit organization supported by Deutsche Post Foundation. The center is associated with the University of Bonn and offers a stimulating research environment through its international network, workshops and conferences, data service, project support, research visits and doctoral program. IZA engages in (i) original and internationally competitive research in all fields of labor economics, (ii) development of policy concepts, and (iii) dissemination of research results and concepts to the interested public. Terms of use: Documents in D I S C U S S I O N P A P E R S E R I E SIZA Discussion Papers often represent preliminary work and are circulated to encourage discussion. Citation of such a paper should account for its provisional character. A revised version may be available directly from the author.IZA Discussion Paper No. 8354 July 2014 ABSTRACT New Evidence on the Relationship between Risk Attitudes and Self-EmploymentThis paper analyses the impact of risk attitudes on the decision to become self-employed among individuals who grew up under the communist regime in Ukraine, which banned selfemployment so that individuals could not observe what it is like to be self-employed. Since the intra-family transmission of self-employment experiences was largely shut down, the observed correlation between risk preferences and self-employment after transition is unlikely to be driven by parents transmitting self-employment experience and risk preferences to their children. Robustness checks on a sample of East Germans confirm that such a third factor explanation is implausible, thus shedding light on the causal nature of the relation between risk preferences and the decision to become self-employed.JEL Classification: J24, D81, P3

Risk Attitudes, Job Mobility and Subsequent Wage Growth During the Early Career

“…While risk attitudes can influence wage growth through the decision to invest in human capital (Shaw, 1996) or through the decision for an occupational environment with specific wage structure (Bonin et al, 2007;Skriabikova et al, 2014), we find some evidence that risk attitudes matter for wage growth through mobility decisions. Our empirical findings are therefore relevant for labour market research which studies groups with pronounced differences in risk attitudes.…”

“…This comprises of studies on the role of risk attitudes in the decision to invest in human capital and its related returns (Shaw, 1996;Brown and Taylor, 2005;Budria et al, 2012), in the decision to become self-employed (Caliendo et al, 2009;Fossen, 2011;Skriabikova et al, 2014) and in sorting into occupations (Fuchs-Schündeln and Schündeln, 2005;Bonin et al, 2007). Second, our study is related to literature which investigates the relationship between job mobility and wage growth.…”

The Impact of Violence on Individual Risk Preferences: Evidence from a Natural Experiment

“…We focus on two such behaviors suggested by the literature: entrepreneurship (Schumpeter 1934, Schumpeter 1939, Skriabikova, Dohmen, and Kriechel 2014 and migration in search of employment (Jaeger, Dohmen, Falk, Huffman, Sunde, andBonin 2010, Bryan, Chowdhury, andMobarak 2014). Both of these actions can be seen through the lens of risk tolerance: for an unemployed or underemployed young adult residing in a rural area, operating one's one business and migrating are two high risk but potentially profitable strategies for improving one's long-term income prospects (Filmer and Fox 2014).…”

Does personality of owners of micro enterprises matter for the relationship between startup capital and entrepreneurial success?

“…Entrepreneurship stimulates economic transformation (Chattopadhyay and Ghosh, 2002;Ireland and Webb, 2007;Skriabikova et al, 2014;Williams et al, 2013;Zahra, 2005). This is the motivation behind enormous efforts of developing nations and their development partners aimed at intensifying entrepreneurial activities.…”