Resource title

Earnings, uncertainty, and the self-employment choice

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Resource description

This paper investigates the relationship between self-employment choice, expected earnings, and uncertainty. Several interesting results emerge from our analysis on Danish longitudinal register data: Firstly, self-employed (taxable) personal income bunch at kink points in the tax system since self-employed can retain earnings and thereby transfer income across tax-years. Secondly, expected income level and income variance are important determinants in choice of occupation. Thirdly, men put more emphasis on expected earnings level, while women appears more risk averse, which contribute to explain why fewer women are self-employed. Finally, our results suggest that non-western immigrants are marginalized into self-employment. Occupational choice, self-employment, wage-dierentials, income uncertainty, risk aversion, overcon dence, self-selection, gender dierences.

Resource author

Daniel le Maire, Bertel Schjerning

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Resource publish date

Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/7701

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