This literature overview examines five studies investigating the monetary returns to entrepreneurship compared to wage employment. It starts with a summary of findings up to 2007 by observing a meta study and follows by analyzing four recent empirical analyses. These apply various approaches to discover the link between entrepreneurship and individual remuneration: investigating returns to ability, comparing twins, using a broad definition of entrepreneurship, and correcting for underreporting. The results do not indicate a clear direction. Negative, positive and similar returns for entrepreneurs compared to employed individuals are found. However, if one assumes the problems of a restrictive definition of entrepreneurship and of income underreporting to be generally relevant, higher earnings of entrepreneurs seem plausible.
Contents
List of Abbreviations
List of Figures
List of Tables
List of Equations
1 Introduction
2 State of Affairs in 2007
3 Negative Returns
3.1 Returns to Ability
3.2 Within-twin-analysis
4 Positive Returns
4.1 Limited Liability Company Entrepreneurs
4.2 Income Underreporting
5 Comparison of Results
6 Conclusion
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