Heterogeneous entrepreneurs from occupational choices in economies with minimum wages

Heterogeneous entrepreneurs from occupational choices in economies with minimum wages This paper examines how the distribution of skills, organizational diseconomies of size, and the introduction of a minimum wage affect the total output of the economy and the relative size and average per capita income of employees, solo self-employed, and employers, in a market equilibrium from occupational choices of individuals with different skills. The model explains the heterogeneity observed among occupational groups beyond employers and employees, and predicts differences in the sing of the association between entrepreneurs’ rates and economic development depending on the entrepreneurs’ type. The introduction of a minimum wage leads to involuntary solo self-employed, more skilled voluntary solo self-employed, and fewer employers. A minimum wage lowers total output and has income redistribution effects: income per capita decreases in the individuals in the two extremes of the skills’ distribution and increases in the middle class. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Heterogeneous entrepreneurs from occupational choices in economies with minimum wages

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Publisher
Springer Journals
Copyright
Copyright © 2014 by Springer Science+Business Media New York
Subject
Economics / Management Science; Management/Business for Professionals; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1007/s11187-014-9610-4
Publisher site
See Article on Publisher Site

Abstract

This paper examines how the distribution of skills, organizational diseconomies of size, and the introduction of a minimum wage affect the total output of the economy and the relative size and average per capita income of employees, solo self-employed, and employers, in a market equilibrium from occupational choices of individuals with different skills. The model explains the heterogeneity observed among occupational groups beyond employers and employees, and predicts differences in the sing of the association between entrepreneurs’ rates and economic development depending on the entrepreneurs’ type. The introduction of a minimum wage leads to involuntary solo self-employed, more skilled voluntary solo self-employed, and fewer employers. A minimum wage lowers total output and has income redistribution effects: income per capita decreases in the individuals in the two extremes of the skills’ distribution and increases in the middle class.

Journal

Small Business EconomicsSpringer Journals

Published: Sep 18, 2014

References

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