What is Left to Residual Claimants? The Empirics of Income Reported by Entrepreneurs and Workers

25 Pages Posted: 6 Jul 2004

See all articles by Panu Poutvaara

Panu Poutvaara

University of Helsinki - Department of Economics; Helsinki Center of Economic Research (HECER); CESifo (Center for Economic Studies and Ifo Institute); IZA Institute of Labor Economics

Juha Tuomala

Government of the Republic of Finland - VATT Institute for Economic Research

Date Written: June 2004

Abstract

Using Finnish panel data, we study how entrepreneurs differ from workers in education and income dynamics. We find that workers have higher median income in all educational groups. Without additional controls, entrepreneurs have higher average income with all but undergraduate level of education. However, random effects and matching models suggest that entrepreneurs have lower incomes. We also analyze those who changed careers. Those with higher level of education are more likely to switch from entrepreneurship to workers, while education does not explain, in a statistically significant level, switching from being worker to entrepreneurship.

Keywords: entrepreneurs, workers, Finnish labor market, education

JEL Classification: J24, J31, C23

Suggested Citation

Poutvaara, Panu and Tuomala, Juha, What is Left to Residual Claimants? The Empirics of Income Reported by Entrepreneurs and Workers (June 2004). Available at SSRN: https://ssrn.com/abstract=561743 or http://dx.doi.org/10.2139/ssrn.561743

Panu Poutvaara (Contact Author)

University of Helsinki - Department of Economics ( email )

P.O. Box 54
FIN-00014 Helsinki
Finland

HOME PAGE: http://www.valt.helsinki.fi/blogs/poutvaar/

Helsinki Center of Economic Research (HECER) ( email )

FI-00014 Helsinki
Finland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Juha Tuomala

Government of the Republic of Finland - VATT Institute for Economic Research ( email )

Arkadiankatu 7
P.O Box 1279
Helsinki, FIN-00531
Finland

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