An Empirical Study of the Transition from Paid Work to Self-Employment

Authors

S. Ramakrishna Velamuri, University of Navarra
S. Venkataraman, University of Virginia

Abstract

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.

JEL Codes

J23, M13

Keywords

Self Employment, Labor Demand

Recommended Citation

Velamuri, S. Ramakrishna and Venkataraman, S. (2005) "An Empirical Study of the Transition from Paid Work to Self-Employment," Journal of Entrepreneurial Finance and Business Ventures: Vol. 10: Iss. 1, pp. 1-16.
DOI: https://doi.org/10.57229/2373-1761.1223
Available at: https://digitalcommons.pepperdine.edu/jef/vol10/iss1/3