nep-ent New Economics Papers
on Entrepreneurship
Issue of 2009‒07‒11
nine papers chosen by
Marcus Dejardin
Notre-Dame de la Paix University

  1. Entrepreneurship: Origins and Returns By Berglann, Helge; Moen, Espen R.; Roed, Knut; Skogstrøm, Jens Fredrik
  2. Who Values the Status of the Entrepreneur? By van Praag, Mirjam
  4. Entrepreneurs' Acceptance of Formal Institutions: A Cross-country Analysis By Andreas Freytag; Florian Noseleit
  5. Intersections of Immigrant status and Gender in the Swedish Entrepreneurial Landscape By Hedberg, Charlotta
  6. How does entry regulation influence entry into self-employment and occupational mobility? By Susanne Prantl; Alexandra Spitz-Oener
  7. Taxation and Entrepreneurship in a Welfare State By Stenkula, Mikael
  8. WHY DO RURAL FIRMS LIVE LONGER? By Yu, Li; Orazem, Peter; Jolly, Robert W.
  9. Creative Accounting or Creative Destruction? Firm-level Productivity Growth in Chinese Manufacturing By Loren Brandt; Johannes Van Biesebroeck; Yifan Zhang

  1. By: Berglann, Helge (Norwegian Agricultural Economics Research Institute (NILF)); Moen, Espen R. (Norwegian School of Management (BI)); Roed, Knut (Ragnar Frisch Centre for Economic Research); Skogstrøm, Jens Fredrik (Ragnar Frisch Centre for Economic Research)
    Abstract: We examine the origins and outcome of entrepreneurship on the basis of exceptionally comprehensive Norwegian matched worker-firm-owner data. In contrast to most existing studies, our notion of entrepreneurship not only comprises self-employment, but also employment in partly self-owned limited liability firms. Based on this extended entrepreneurship concept, we find that entrepreneurship tends to be profitable. It also raises income uncertainty, but the most successful quartile gains much more than the least successful quartile loses. Key determinants of the decision to become an entrepreneur are occupational qualifications, family resources, gender, and work environments. Individual unemployment encourages, while aggregate unemployment discourages entrepreneurship.
    Keywords: entrepreneurship, self-employment, spin-offs
    JEL: L26 M13
    Date: 2009–06
  2. By: van Praag, Mirjam (University of Amsterdam)
    Abstract: Parker and Van Praag (2009) showed, based on theory, that the group status of the profession 'entrepreneurship' shapes people's occupational preferences and thus their choice behavior. The current study focuses on the determinants and consequences of the group status of a profession, entrepreneurship in particular. If the group status of entrepreneurship is related to individual choice behavior, it is policy relevant to better understand this relationship and the determinants of the status of the entrepreneur. For reasons outlined in the introduction, this study focuses on (800) students in the Netherlands. We find that the status of occupations is mostly determined by the required level of education, the income level to be expected and respect. Furthermore, our results imply that entrepreneurship is associated with hard work, high incomes, but little power and education. Moreover, we find evidence that individual characteristics, such as entrepreneurship experience, vary systematically with the perceived status of occupations, thereby contributing ammunition to a fundamental discussion in the literature. Finally, we find a strong association between the perceived status of the entrepreneur and the estimated likelihood and willingness to become an entrepreneur.
    Keywords: entrepreneurship, self-employment, occupational choice, occupational status, group status, peer group effects
    JEL: J22 J24 L26 M13 M59
    Date: 2009–06
  3. By: Yu, Li; Orazem, Peter; Jolly, Robert W.
    Abstract: This study analyzes whether economic conditions at the time of labor market entry affect entrepreneurship, using difference in business start-ups between cohorts of college students graduating in boom or bust economic conditions. Those graduating during an economic bust tend to delay their business start-ups relative to boom period graduates by about two years. Our results are consistent with additional findings that higher unemployment rates at time of graduation significantly delay the first business start-up across all college graduation cohorts over the 1982-2004 period. The adverse effect of a bust is temporary, delaying but not preventing self-employment over the life-cycle.
    Keywords: boom, bust, entrepreneurship, occupatiopnal choice, survivor analysis, business cycle, cohort
    JEL: J2
    Date: 2009–07–03
  4. By: Andreas Freytag (Friedrich-Schiller-University Jena, School of Economics and Business Administration); Florian Noseleit (European Centre for International Political Economy (ECIPE))
    Abstract: Institutional settings and the resulting incentive structures are crucial for economic development. The type of entrepreneurial activity and the entrepreneurial effort are especially dependent on underlying incentive structures. We argue that institutions with better incentive structures for entrepreneurs are perceived as being of higher quality by this group. We find empirical evidence that high institutional quality increases the willingness of the self-employed to accept these institutions. Furthermore, institutional quality affects the deviation in acceptance of self-employed to non-self-employed such that lower institutional quality is related to less acceptance by entrepreneurs compared to the rest of society.
    Keywords: Entrepreneurship, self-employment, institutions, cross-country study
    JEL: L26 A13 H11 K11 O43 P48
    Date: 2009–07–02
  5. By: Hedberg, Charlotta (Stockholm University Linnaeus Center for Integration Studies - SULCIS)
    Abstract: Labour markets in welfare states are structured along the lines of gender and immigrant & minority statuses. This paper brings novel insights into the issue of ethnic entrepreneurship as a means of sustainable inclusion of immigrants into the labour market by adding a gender dimension. Based on unique longitudinal data, the paper analyses the division of labour and the work incomes of female immigrant entrepreneurs in contrast with male immigrants and native-born Swedes. The results indicate that the division of labour is structured along the lines of both gender and immigrant status. At first glance, a gender perspective on ethnic entrepreneurship acknowledges persistent inequalities in the labour market. Analysis of entrepreneurship within niches such as the health care sector, however, indicates greater complexity in the entrepreneurial landscape. The paper identifies implications of a nuanced analysis of entrepreneurial research, which recognises diversity along the axes of both immigrant status and gender. Entrepreneurial processes can lead to both exclusion and inclusion of minority groups in the labour market, depending on the sector concerned.
    Keywords: Entrepreneurship; gender; immigrant status; segmentation; division of labour
    JEL: J15 J16 L26
    Date: 2009–06–29
  6. By: Susanne Prantl; Alexandra Spitz-Oener
    Abstract: We analyze how an entry regulation that imposes a mandatory educational standard affects entry into self-employment and occupational mobility. We exploit the German reunification as a natural experiment and identify regulatory effects by comparing differences between regulated occupations and unregulated occupations in East Germany to the corresponding differences in West Germany after reunification. Consistent with our expectations, we find that entry regulation reduces entry into selfemployment and occupational mobility after reunification more in regulated occupations in East Germany than in West Germany. Our findings are relevant for transition or emerging economies as well as for mature market economies requiring large structural changes after unforeseen economic shocks.
    Keywords: Entry Regulation, Self-Employment, Occupational Mobility
    JEL: J24 J62 K20 L11 L51 M13
    Date: 2009–06
  7. By: Stenkula, Mikael (Research Institute of Industrial Economics (IFN))
    Abstract: Does tax policy affect the rate of self-employment in a modern welfare state? This question is analyzed empirically based on Swedish data for the entire post-war period. Available tax data indicate that payroll taxes have had a negative influence on the unincorporated rate of self-employment, though the effect is modest. No effects from regular labor income taxation or capital gains taxation are found. The paper improves upon earlier studies in that it tries to separate the effects of different taxes, and uses cointegration techniques. A further extension is that it studies a Scandinavian high-tax welfare state. Earlier time-series studies analyzing self-employment and taxation have with few exceptions been based on data from countries with relatively low tax levels and less comprehensive welfare systems, notably the US and the UK.
    Keywords: Entrepreneurship; Self-employment; Taxation; Welfare state
    JEL: H20 J23 L26
    Date: 2009–06–10
  8. By: Yu, Li; Orazem, Peter; Jolly, Robert W.
    Abstract: Rural firms have a higher survival rate than urban firms. Over the first 13 years after firm entry, the hazard rate for firm exits is persistently higher for urban firms. While differences in firm attributes explain some of the rural-urban gap in firm survival, rural firms retain a survival advantage 18.5% greater than observationally equivalent urban firms. We argue that in competitive markets, the remaining survival advantage for rural firms must be attributable to unobserved factors that must be known at the time of entry. A plausible candidate for such a factor is thinner markets for the capital of failed rural firms. The implied lower salvage value of rural firms suggests that firms sorting into rural markets must have a higher probability of success in order to leave their expected profits equal to what they could earn in an urban market.
    Keywords: Rural, urban, entry, exit, survival, sorting , salvage value
    JEL: R0
    Date: 2009–07–03
  9. By: Loren Brandt; Johannes Van Biesebroeck; Yifan Zhang
    Abstract: We present the first comprehensive set of firm-level total factor productivity estimates for China’s manufacturing sector that spans her entry into WTO. We find that productivity growth is among the highest compared to other countries. For our preferred estimate, the weighted average annual productivity growth for incumbents is 2.7% for a gross output production function and 7.7% for a value added production function over the period 1998-2006. Of the various sensitivity checks we carry out, controlling for the increase in labor quality and labor hours, as proxied by the rising real wage, has the largest (downward) effect on the productivity estimates. We further document that new entrants are a particularly dynamic force and that firms experience large productivity declines before exiting from the sample. Overall, net entry contributes roughly half to total TFP growth. Aggregate productivity growth, however, is tempered by a much lower effect of reallocation of inputs towards higher productivity firms, compared to the U.S. benchmark.
    JEL: D24 O14
    Date: 2009–07

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