Entrepreneurship and Individual Remuneration. Does It Pay to Be an Entrepreneur?

Seminar paper from the year 2016 in the subject Business economics - Miscellaneous, grade: 1,0, Humboldt-University of Berlin (Chair of Entrepreneurial and Behavioral Decision Making), course: Innovative Entrepreneurship, language: English, abstract: 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.