NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?

Ross Levine, Yona Rubinstein

NBER Working Paper No. 19276
Issued in August 2013
NBER Program(s):   CF   LS

We disaggregate the self-employed into incorporated and unincorporated to distinguish between "entrepreneurs" and other business owners. We show that the incorporated self-employed and their businesses engage in activities that demand comparatively strong nonroutine cognitive abilities, while the unincorporated and their firms perform tasks demanding relatively strong manual skills. The incorporated selfemployed have distinct cognitive and noncognitive traits. Besides tending to be white, male, and come from higher-income families, the incorporated—as teenagers—typically scored higher on learning aptitude tests, had greater self-esteem, and engaged in more disruptive, illicit activities. The combination of "smart" and "illicit" tendencies as youths accounts for both entry into entrepreneurship and the comparative earnings of entrepreneurs. In contrast to past research, we find that entrepreneurs earn more per hour and work more hours than their salaried and unincorporated counterparts.

download in pdf format
   (1407 K)

email paper

This paper was revised on September 29, 2015

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w19276

Published: Ross Levine & Yona Rubinstein, 2017. "Smart and Illicit: Who Becomes an Entrepreneur and Do They Earn More?," The Quarterly Journal of Economics, Oxford University Press, vol. 132(2), pages 963-1018. citation courtesy of

Users who downloaded this paper also downloaded* these:
Hurst and Pugsley w17041 What Do Small Businesses Do?
Chatterji, Glaeser, and Kerr w19013 Clusters of Entrepreneurship and Innovation
Black, Devereux, Lundborg, and Majlesi w21332 On the Origins of Risk-Taking
Heckman, Stixrud, and Urzúa w12006 The Effects of Cognitive and Noncognitive Abilities on Labor Market Outcomes and Social Behavior
Angrist, Cohodes, Dynarski, Pathak, and Walters w19275 Stand and Deliver: Effects of Boston's Charter High Schools on College Preparation, Entry, and Choice
 
Publications
Activities
Meetings
NBER Videos
Themes
Data
People
About

National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us