Financial Development, Entrepreneurship, and Job Satisfaction
33 Pages Posted: 14 Mar 2011
Date Written: September 1, 2010
Abstract
This paper shows that utility differences between the self-employed and employees increase with financial development. This effect is not explained by increased profits but by an increased value of non-monetary benefits, in particular job independence. We interpret these findings by building a simple occupational choice model in which financial constraints may impede the creation of firms and depress labor demand, thereby pushing some individuals into self-employment for lack of salaried jobs. In this setting, financial development favors a better matching between individual motivation and occupation, thereby increasing entrepreneurial utility despite increasing competition and so reducing profits.
Keywords: Financial development, entrepreneurship, job satisfaction
JEL Classification: L26, J20, O16
Suggested Citation: Suggested Citation
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