Stars and Misfits: Self-Employment and Labor Market Frictions

39 Pages Posted: 25 Mar 2008 Last revised: 29 Oct 2015

See all articles by Thomas B. Astebro

Thomas B. Astebro

HEC Paris - Economics and Decision Sciences

Jing Chen

Florida International University (FIU) - Department of Economics

Peter Thompson

Georgia Institute of Technology - Scheller College of Business

Date Written: March 1, 2008

Abstract

Recent evidence has shown that entrants into self-employment are disproportionately drawn from the tails of the earnings and ability distributions. This observation is explained by a multi-task model of occupational choice in which frictions in the labor market induces mismatches between firms and workers, and mis-assignment of workers to tasks. The model also yields distinctive predictions relating prior work histories to earnings and to the probability of entry into self-employment. These predictions are tested with the Korean Labor and Income Panel Study, from which we find considerable support for the model.

Keywords: entrepreneurship, self-employment, jack-of-all-trades, skill complementarity

JEL Classification: J24, L26

Suggested Citation

Astebro, Thomas B. and Chen, Jing and Thompson, Peter, Stars and Misfits: Self-Employment and Labor Market Frictions (March 1, 2008). Available at SSRN: https://ssrn.com/abstract=1113048 or http://dx.doi.org/10.2139/ssrn.1113048

Thomas B. Astebro (Contact Author)

HEC Paris - Economics and Decision Sciences ( email )

Jouy-en-Josas Cedex, 78351
France

HOME PAGE: http://www.hec.edu/Faculty-Research/Faculty-Directory/ASTEBRO-Thomas

Jing Chen

Florida International University (FIU) - Department of Economics ( email )

Miami, FL 33199
United States

Peter Thompson

Georgia Institute of Technology - Scheller College of Business ( email )

800 West Peachtree St., NW
Atlanta, GA 30308-1149
United States

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