Does Entrepreneurship Pay or Satisfy?

Abstract

Much research has been conducted studying entry into entrepreneurship and the corresponding rewards and consequences of entrepreneurship on wages. This literature finds mixed results regarding whether workers enter entrepreneurship to maximize their wages or to maximize their non-pecuniary benefits. I suggest that whether workers are able to increase their pecuniary or non-pecuniary benefits in entrepreneurship depends on their motivations for entering entrepreneurship in the first place. I use longitudinal SESTAT data on over 28,000 scientists and engineers to track employment changes and changes in work outcomes over time for the same individuals. I examine changes in pecuniary and non-pecuniary work outcomes when wage workers transition to entrepreneurship, compared to those who do not change employers, as well as to those who change employers but do not transition to self-employment. This allows me to gain a deeper look at the implications of different types of mobility on work outcomes, instead of ju...