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Financial Development, Entrepreneurship, and Job Satisfaction

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  • Milo Bianchi

    (Université Paris-Dauphine)

Abstract

This paper shows that utility differences between the self-employed and employees increase with financial development. This effect is explained not by increased profits but by an increased value of nonmonetary benefits, in particular job independence. We interpret these findings by building a simple occupational choice model in which financial constraints may impede the creation of firms and depress labor demand, thereby pushing some individuals into self-employment for lack of salaried jobs. In this setting, financial development favors a better matching between individual motivation and occupation, thereby increasing entrepreneurial utility despite increasing competition and so reducing profits. © 2011 The President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • Milo Bianchi, 2012. "Financial Development, Entrepreneurship, and Job Satisfaction," The Review of Economics and Statistics, MIT Press, vol. 94(1), pages 273-286, February.
    • Handle: RePEc:tpr:restat:v:94:y:2012:i:1:p:273-286
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    More about this item

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General

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