Occupational choice and the quality of entrepreneurs

İnci, Eren (2013) Occupational choice and the quality of entrepreneurs. Journal of Economic Behavior and Organization, 92 . pp. 1-21. ISSN 0167-2681

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This paper is the first to endogenize both risk-free interest and wage rates in a tractable occupational choice model. Individuals who differ in terms of entrepreneurial ability and wealth choose between entrepreneurship, and wage-earning and the wealth classes form endogenously. Because of the general equilibrium repercussions of policies, whether to tax or subsidize entrepreneurs depends crucially on the shape of the wealth distribution. In particular, a tax on entrepreneurs used to subsidize workers can sometimes increase the average quality of entrepreneurs. Unlike the previous studies, in all of which the risk-free interest rate is exogenous, the policy works by affecting the loan supply to the banks via swapping some low-ability upper-middle-class entrepreneurs with an equal number of high- and low-ability poor-class workers.
Item Type: Article
Uncontrolled Keywords: entrepreneurship; entrepreneurial policy; general equilibrium contract theory; occupational choice
Subjects: H Social Sciences > HB Economic Theory
Divisions: Faculty of Arts and Social Sciences > Academic programs > Economics
Faculty of Arts and Social Sciences
Depositing User: Eren İnci
Date Deposited: 21 Jun 2013 10:57
Last Modified: 22 May 2019 13:00
URI: https://research.sabanciuniv.edu/id/eprint/21614

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