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The psychological strain of becoming self-employed: a longitudinal investigation of honeymoon-hangover effects

Author

Listed:
  • Jingjing Qu

    (Xuhui District)

  • Jun Li

    (University of Huddersfield)

  • Yannis Georgellis

    (SP Jain School of Global Management, 2 Harbour Exchange Square)

Abstract

Using British longitudinal data, we re-examine the honeymoon-hangover hypothesis (Boswell et al., 2005) for the psychological strain (measured by anxiety and depression) employees experience when they become self-employed. Most previous studies explore self-employment honeymoon-hangover effects mostly for job or life satisfaction. Employing the entropy balancing approach, we find that employees who make the transition to self-employment experience an immediate improvement in anxiety and depression, like that experienced by those who change employers. Our results hint at a slightly stronger initial improvement of psychological strain for those switching employers compared to those entering self-employment. However, within-individual variation analysis of psychological strain supports the honeymoon-hangover hypothesis in that any early anxiety and depression improvements taper off over time. Practical and theoretical implications are discussed.

Suggested Citation

  • Jingjing Qu & Jun Li & Yannis Georgellis, 2025. "The psychological strain of becoming self-employed: a longitudinal investigation of honeymoon-hangover effects," Small Business Economics, Springer, vol. 64(2), pages 433-449, February.
    • Handle: RePEc:kap:sbusec:v:64:y:2025:i:2:d:10.1007_s11187-024-00913-3
    DOI: 10.1007/s11187-024-00913-3
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    More about this item

    Keywords

    Anxiety; Depression; Honeymoon hangover; Psychological strain; Self-employment; Well-being;
    All these keywords.

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship

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