IDEAS home Printed from https://ideas.repec.org/a/eee/moneco/v86y2017icp36-51.html
   My bibliography  Save this article

Production complementarities and flexibility in a model of entrepreneurship

Author

Listed:
  • Yurdagul, Emircan

Abstract

The focus of this paper is the flexibility in working hours as a motive for entrepreneurship. The model exhibits inflexibilities for workers and entrepreneurs, which arise due to complementarities in production. In addition, it allows for volatile value of leisure to make flexibility in hours desirable. Differences in occupation-specific flexibility, disciplined with the observed patterns in hours (level, persistence, dispersion) and income (persistence, dispersion), can explain relatively low income levels of entrepreneurs in the US and the occupation-specific distributions of working hours and income. Policy relevance of the model features is discussed using experiments of workweek restrictions and income taxation.

Suggested Citation

  • Yurdagul, Emircan, 2017. "Production complementarities and flexibility in a model of entrepreneurship," Journal of Monetary Economics, Elsevier, vol. 86(C), pages 36-51.
    • Handle: RePEc:eee:moneco:v:86:y:2017:i:c:p:36-51
    DOI: 10.1016/j.jmoneco.2017.01.002
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0304393217300028
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jmoneco.2017.01.002?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. René Böheim & Mark P. Taylor, 2004. "Actual and Preferred Working Hours," British Journal of Industrial Relations, London School of Economics, vol. 42(1), pages 149-166, March.
    2. Francisco J. Buera & Yongseok Shin, 2013. "Financial Frictions and the Persistence of History: A Quantitative Exploration," Journal of Political Economy, University of Chicago Press, vol. 121(2), pages 221-272.
    3. Jang-Sup Shin, 2011. "Finance and Economic Development in China: An Introduction," Global Economic Review, Taylor & Francis Journals, vol. 40(2), pages 141-143.
    4. Daniel Aaronson & Eric French, 2004. "The Effect of Part-Time Work on Wages: Evidence from the Social Security Rules," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 329-352, April.
    5. Erik Hurst & Benjamin Wild Pugsley, 2011. "What Do Small Businesses Do?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 42(2 (Fall)), pages 73-142.
    6. Dickens, William T & Lundberg, Shelly J, 1993. "Hours Restrictions and Labor Supply," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 34(1), pages 169-192, February.
    7. Karen Kopecky & Richard Suen, 2010. "Finite State Markov-chain Approximations to Highly Persistent Processes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 13(3), pages 701-714, July.
    8. Richard Rogerson, 2011. "Individual and Aggregate Labor Supply with Coordinated Working Times," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 7-37, August.
    9. Stewart, Mark B & Swaffield, Joanna K, 1997. "Constraints on the Desired Hours of Work of British Men," Economic Journal, Royal Economic Society, vol. 107(441), pages 520-535, March.
    10. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2011. "Finance and Development: A Tale of Two Sectors," American Economic Review, American Economic Association, vol. 101(5), pages 1964-2002, August.
    11. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    12. Andrés Erosa & Luisa Fuster & Gueorgui Kambourov, 2016. "Towards a Micro-Founded Theory of Aggregate Labour Supply," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 83(3), pages 1001-1039.
    13. Marco Cagetti & Mariacristina De Nardi, 2006. "Entrepreneurship, Frictions, and Wealth," Journal of Political Economy, University of Chicago Press, vol. 114(5), pages 835-870, October.
    14. Barton H. Hamilton, 2000. "Does Entrepreneurship Pay? An Empirical Analysis of the Returns to Self-Employment," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 604-631, June.
    15. Altonji, Joseph G & Paxson, Christina H, 1988. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Trade-Offs," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 254-276, April.
    16. Virgiliu Midrigan & Daniel Yi Xu, 2014. "Finance and Misallocation: Evidence from Plant-Level Data," American Economic Review, American Economic Association, vol. 104(2), pages 422-458, February.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Felix Wellschmied & Emircan Yurdagul, 2021. "Endogenous Hours and the Wealth of Entrepreneurs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 79-99, January.
    2. Noh‐Sun Kwark & Eunseong Ma, 2021. "Entrepreneurship And Income Distribution Dynamics: Why Is The Income Share Of Top Income Earners Acyclical Over The Business Cycle?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(1), pages 321-356, February.
    3. Kuhn, Moritz & Luo, Jinfeng & Manovskii, Iourii & Qiu, Xincheng, 2023. "Coordinated firm-level work processes and macroeconomic resilience," Journal of Monetary Economics, Elsevier, vol. 137(C), pages 107-127.
    4. Alexander Bick & Adam Blandin & Richard Rogerson, 2022. "Hours and Wages," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 137(3), pages 1901-1962.
    5. Inés Berniell & Lucila Berniell & Dolores de la Mata & María Edo & Yarine Fawaz & Matilde P. Machado & Mariana Marchionni, 2020. "Motherhood and the Allocation of Talent," CEDLAS, Working Papers 0270, CEDLAS, Universidad Nacional de La Plata.
    6. Allub, Lian & Erosa, Andrés, 2019. "Financial frictions, occupational choice and economic inequality," Journal of Monetary Economics, Elsevier, vol. 107(C), pages 63-76.
    7. Julian Neira & Rish Singhania, 2022. "The role of corporate taxes in the decline of the startup rate," Economic Inquiry, Western Economic Association International, vol. 60(3), pages 1277-1295, July.
    8. Del Rey, Elena & Naval, Joaquín & Silva, José I., 2022. "Hours and wages: A bargaining approach," Economics Letters, Elsevier, vol. 217(C).
    9. Shao, Lin & Sohail, Faisal & Yurdagul, Emircan, 2023. "Are working hours complements in production?," Journal of Economic Dynamics and Control, Elsevier, vol. 153(C).
    10. Neira, Julian & Singhania, Rish, 2020. "Quantifying the Effect of Corporate Taxes on the Life Cycle of Firms," MPRA Paper 99359, University Library of Munich, Germany.
    11. Ana I. Moro Egido & Joaquin Naval & Jose I. Silva, 2023. "Part-time hours and wages," ThE Papers 23/06, Department of Economic Theory and Economic History of the University of Granada..
    12. Felix Wellschmied & Emircan Yurdagul, 2021. "Endogenous Hours and the Wealth of Entrepreneurs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 79-99, January.
    13. Shutao Cao & Mohanad Salameh & Mai Seki & Pierre St-Amant, 2017. "Trends in Firm Entry and New Entrepreneurship in Canada," Canadian Public Policy, University of Toronto Press, vol. 43(3), pages 202-220, September.
    14. Oluwasheyi Oladipo & Katarzyna Platt & Hyoung Suk Shim, 2023. "Female entrepreneurs managing from home," Small Business Economics, Springer, vol. 61(2), pages 447-464, August.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Felix Wellschmied & Emircan Yurdagul, 2021. "Endogenous Hours and the Wealth of Entrepreneurs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 79-99, January.
    2. Felix Wellschmied & Emircan Yurdagul, 2021. "Endogenous Hours and the Wealth of Entrepreneurs," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 39, pages 79-99, January.
    3. Allub, Lian & Erosa, Andrés, 2019. "Financial frictions, occupational choice and economic inequality," Journal of Monetary Economics, Elsevier, vol. 107(C), pages 63-76.
    4. Anmol Bhandari & Ellen R. McGrattan, 2017. "Sweat Equity in U.S. Private Business," Staff Report 560, Federal Reserve Bank of Minneapolis.
    5. Markus Poschke, 2018. "The Firm Size Distribution across Countries and Skill-Biased Change in Entrepreneurial Technology," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(3), pages 1-41, July.
    6. Kerr, Sari Pekkala & Kerr, William R. & Nanda, Ramana, 2022. "House prices, home equity and entrepreneurship: Evidence from U.S. census micro data," Journal of Monetary Economics, Elsevier, vol. 130(C), pages 103-119.
    7. John Bailey Jones & Sangeeta Pratap, 2020. "An Estimated Structural Model of Entrepreneurial Behavior," American Economic Review, American Economic Association, vol. 110(9), pages 2859-2898, September.
    8. Qi, Shi & Schlagenhauf, Don, 2021. "The Kansas tax experiment: The matter of legal form of organization," Journal of Economic Dynamics and Control, Elsevier, vol. 133(C).
    9. Poschke, Markus, 2013. "The Decision to Become an Entrepreneur and the Firm Size Distribution: A Unifying Framework for Policy Analysis," IZA Discussion Papers 7757, Institute of Labor Economics (IZA).
    10. Poschke, Markus, 2013. "Who becomes an entrepreneur? Labor market prospects and occupational choice," Journal of Economic Dynamics and Control, Elsevier, vol. 37(3), pages 693-710.
    11. Marta Morazzoni & Andrea Sy, 2021. "Female Entrepreneurship, Financial Frictions and Capital Misallocation in the US," Working Papers 1299, Barcelona School of Economics.
    12. Pavel Sevcik, 2015. "Financial Frictions, Internal Capital Markets, and the Organization of Production," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(3), pages 505-522, July.
    13. Sabrina T. Howell, 2017. "Reducing Information Frictions in Venture Capital: The Role of New Venture Competitions," NBER Working Papers 23874, National Bureau of Economic Research, Inc.
    14. Boar, Corina & Knowles, Matthew, 2024. "Optimal taxation of risky entrepreneurial capital," Journal of Public Economics, Elsevier, vol. 234(C).
    15. Lee, Jungho & Xu, Jianhuan, 2020. "Why do businesses grow faster in urban areas than in rural areas?," Regional Science and Urban Economics, Elsevier, vol. 81(C).
    16. Ranasinghe, Ashantha & Restuccia, Diego, 2018. "Financial frictions and the rule of law," Journal of Development Economics, Elsevier, vol. 134(C), pages 248-271.
    17. Dabla-Norris, Era & Ji, Yan & Townsend, Robert M. & Filiz Unsal, D., 2021. "Distinguishing constraints on financial inclusion and their impact on GDP, TFP, and the distribution of income," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 1-18.
    18. Francisco J. Buera & Joseph P. Kaboski & Yongseok Shin, 2015. "Entrepreneurship and Financial Frictions: A Macrodevelopment Perspective," Annual Review of Economics, Annual Reviews, vol. 7(1), pages 409-436, August.
    19. Sampreet Singh Goraya, 2019. "How does Caste Affect Entrepreneurship? Birth vs Worth," Working Papers 1104, Barcelona School of Economics.
    20. Ross Levine & Yona Rubinstein, 2018. "Selection into Entrepreneurship and Self-Employment," NBER Working Papers 25350, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:moneco:v:86:y:2017:i:c:p:36-51. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505566 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.