Essays on self-employment and entrepreneurship.

다국어 초록 (Multilingual Abstract)

This thesis investigates to what extent different factors influence individuals to become self-employed (or entrepreneurs) and how the self-employed are different from other workers. Two of the essays focus on the decision to become self-employed, while the third essay compares the earnings of employees and the self-employed.
The first essay uses individual level data to assess the effects of tax policy on self-employment. This essay uses repeated cross-section data from the Surveys of Consumer Finances (SCF) against the background of the tax reforms of 1986 and 1993 to gauge the influence of taxes on self-employment. The findings of this essay indicate that marginal and average tax rates are negatively related to the propensity to become self-employed. However, these effects are only significant for the 1986 tax reforms and are sensitive to the model specification. Other factors, such as education, industry, wealth, and attitude toward risks, are consistently more important influences on the choice to become self-employed.
The second essay examines the relationship between wealth and entrepreneurship. Numerous studies find a positive relationship between wealth and entering entrepreneurship, and interpret this as evidence of the existence of liquidity constraints. However, recent research has called this claim into question. Using data from the SCF, this essay shows that the relationship between wealth and entrepreneurship is only significant for high-wealth households and that liquidity constraints do not appear to bind for the majority of new entrepreneurs. Other possible explanations for the relationship between wealth and entrepreneurship include lower risk aversion among high wealth households and differences in the types of businesses started by high wealth households.
The third essay compares the earnings distributions of employees and the self-employed. This essay uses data from the SCF to construct alternative measures of self-employment earnings that capture important differences in how self-employment earnings are generated, such as accounting for changes in the equity value of the business. The results show that the measure of self-employed earnings used in the comparison matters; the typical definition of self-employed earnings (a net income based measure) may be a lower bound on the actual earnings of the self-employed.