Question

Comparative advantage in self-employment and paid work

Answer 1

The author reports a study of self-employment/paid-work choice, based on a representative sample of white Canadian men. The main findings are as follows: relative potential earnings is the main choice determinant; potential earnings differences between groups is primarily due to unobserved factors: market values of observed characteristics are similar between groups and relative potential earnings, based only on observed characteristics, are not an explainer of choice; and paid workers have higher potential earnings in both sectors, with a greater advantage in paid work. But the apparent comparative advantage is not significant.

Comparative Advantage in Self-Employment and Paid Work | Request PDF. Available from: https://www.researchgate.net/publication/4818779_Comparative_Advantage_in_Self-Employment_and_Paid_Work#rft [accessed Dec 21 2017].


When establishing a new business, an entrepreneur will be concerned about the investment itself, and the amount of capital locked into the investment. The role of financial factors in the setting up of businesses has drawn a particular attention of researchers (Evans and Jovanovic, 1989;Bernhardt, 1994;Constant and Zimmermann, 2006). Authors have found a significant influence of liquidity constraints on the propensity to become self-employed. ...