The Returns to Entrepreneurship: Evidence from Matched Person-Firm Data

On the Origins of Entrepreneurship: Evidence from Sibling Correlations

“…The latter require mostly routine manual tasks and are typically small, owner-operated firms with no employees and limited growth ambitions (Hurst and Pugsley, 2011). By contrast, incorporated firms require significant nonroutine cognitive and non-cognitive tasks (Levine and Rubinstein, 2017) and on average have more employees (Åstebro and Tåg, 2017), a higher likelihood of growth and reaching an IPO (Guzman and Stern, 2016), and higher entrepreneurial income (van Praag and Raknerud, 2014;Levine and Rubinstein, 2017;Humphries, 2017). Incorporated firms contribute to top income inequality, whereas unincorporated firms increase inequality at the bottom of the distribution (Halvarsson et al, 2018).…”

On the Origins of Entrepreneurship: Evidence from Sibling Correlations

“…Interestingly, parental self-employment is a prime explanatory force in individual self-employment, but not incorporation, and parental incorporation explains best individual incorporation, but not self-employment. This suggests that self-employment and incorporation are different aspects of entrepreneurship (in line with Levine and Rubinstein, 2013;Henrekson and Sanandaji, 2014;van Praag and Raknerud, 2014;Åstebro and Tåg, 2015;Guzman and Stern, 2015), and that there are different transmission mechanisms depending on the type of entrepreneurial engagement of the parents. Parental immigration status, which is typically associated with higher participation in entrepreneurship, does not contribute more than 1.5 percent of sibling correlations, while family structure accounts for less than 1 percent.…”