Selection into entrepreneurship and self-employment

Ross Levine () and Yona Zvi Rubinstein

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We study the effects of ability and liquidity constraints on entrepreneurship. We develop a three sector Roy model that differentiates between entrepreneurs and other self-employed to address puzzling gaps that have emerged between theory and evidence on entry into entrepreneurship. The model predicts—and the data confirm—that entrepreneurs are positively selected on highly-remunerated cognitive and non-cognitive human capital skills, but other self-employed are negatively selected on those same abilities; entrepreneurs are positively selected on collateral, but other self-employed are not; and entrepreneurship is procyclical, but self-employment is countercyclical.

Keywords: entrepreneurship; human capital; occupational choice; corporate finance; business cycles (search for similar items in EconPapers)
JEL-codes: E32 G32 J24 L20 (search for similar items in EconPapers)
Pages: 57 pages
Date: 2020-10-01
New Economics Papers: this item is included in nep-ent, nep-mac and nep-sbm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://eprints.lse.ac.uk/108462/ Open access version. (application/pdf)

Related works:
Working Paper: Selection into entrepreneurship and self-employment (2020)
Working Paper: SELECTION INTO ENTREPRENEURSHIP AND SELF-EMPLOYMENT (2020)
Working Paper: Selection into Entrepreneurship and Self-Employment (2018)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:108462

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