We explore the transition from paid work to self-employment using three explanatory variables: paid income, predicted income, and income for ability. We find no linear relationship between the three variables and the self-employment transition. We then test for curvilinear relationships. We find that individuals with low incomes are more likely to take up self-employment. Further, income for ability is the strongest predictor of the transition to self-employment. The relationship between ability and self-employment is U-shaped: very low ability and very high ability individuals are more likely to take up self-employment.
Self Employment, Labor Demand
Velamuri, S. Ramakrishna and Venkataraman, S.
"An Empirical Study of the Transition from Paid Work to Self-Employment,"
Journal of Entrepreneurial Finance and Business Ventures:
1, pp. 1-16.
Available at: http://digitalcommons.pepperdine.edu/jef/vol10/iss1/3