The Effects of Risk on Self-Employment

The Effects of Risk on Self-Employment The effects of sectoral risk on the propensity to become self-employed are analysed. In contrast to previous studies which assume risk is concentrated only in the self-employment sector, a general equilibrium model is constructed in which uninsurable risk exists in both the paid- and self-employed sectors. It is shown that when agents wish to mix self-employment and employee participation, the effects of sectoral risk on the optimal self-employment decision is ambiguous. This result disappears if agents choose instead to participate in one sector alone. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

The Effects of Risk on Self-Employment

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 1997 by Kluwer Academic Publishers
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
D.O.I.
10.1023/A:1007919805306
Publisher site
See Article on Publisher Site

Abstract

The effects of sectoral risk on the propensity to become self-employed are analysed. In contrast to previous studies which assume risk is concentrated only in the self-employment sector, a general equilibrium model is constructed in which uninsurable risk exists in both the paid- and self-employed sectors. It is shown that when agents wish to mix self-employment and employee participation, the effects of sectoral risk on the optimal self-employment decision is ambiguous. This result disappears if agents choose instead to participate in one sector alone.

Journal

Small Business EconomicsSpringer Journals

Published: Sep 29, 2004

References

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