The entrepreneurship premium

Boyan Jovanovic

    Research output: Contribution to journalArticlepeer-review

    Abstract

    Recent evidence suggests that entrepreneurship does not pay enough to compensate people for the risk that it entails. It sometimes even shows an entrepreneurship discount. This paper shows that such a discount can arise if entrepreneurial skills and working skills are negatively correlated in the population of agents. The paper also shows that in an otherwise standard occupational choice setting, the entrepreneurship premium rises with entrepreneurial scarcity and falls with their span of control. Finally, liquidity constraints on startups raise the entrepreneurship premium by lowering the equilibrium wage.

    Original languageEnglish (US)
    Pages (from-to)555-568
    Number of pages14
    JournalSmall Business Economics
    Volume53
    Issue number3
    DOIs
    StatePublished - Oct 1 2019

    Keywords

    • Entrepreneurship
    • Profit
    • Wage

    ASJC Scopus subject areas

    • Business, Management and Accounting(all)
    • Economics and Econometrics

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