17 Pages Posted: 28 Aug 2004
Job creation is perhaps the key political and economic issue of our time, yet this is one of only three papers to date to consider the nature of job creation amongst the self-employed. We develop a utility based model of self-employment which allows for the self-employed employees. The theory predicts that the higher the endowment of human capital the greater the likelihood of the entrepreneur employing additional labour, subject to overcoming any capital constraints. Empirical testing suggests that the decision to hire employees is related to work and lifetime experiences rather than academic achievements.
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