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Entrepreneurs and Output: Theory and Empirical Evidence with Spanish Data

Author

Listed:
  • Vicente Salas-Fumas

    (Faculty of Economics, University of Zaragota, Spain)

  • J. Javier Sanchez-Asin

    (Faculty of Economics, University of Zaragota, Spain)

  • David Storey

    (School of Business Management and Economics, University of Sussex, UK)

Abstract

This paper extends the Lucas (1978) model of occupational choices by individuals with different skills, beyond the simple options of self-employment or wage-employment, by including a second choice for the self-employed. That is, an option to hire employees and so become self-employed with employees (SEWEs), or to be self-employed without employees (SEWNEs). We solve for the market equilibrium and examine the sensitivity of relative sizes of occupational groups, and of the level of productivity, to changes in the exogenous parameters. The results show that the positive (negative) association between number of SEWEs (SEWNEs) and productivity, observed in the Spanish data, can be explained, under certain conditions, as the result of cross-region and time differences in average skills. These findings point to the importance of distinguishing between SEWEs and SEWNEs in drawing valid conclusions concerning any link between entrepreneurship and economic development.

Suggested Citation

  • Vicente Salas-Fumas & J. Javier Sanchez-Asin & David Storey, 2013. "Entrepreneurs and Output: Theory and Empirical Evidence with Spanish Data," SPRU Working Paper Series 2013-13, SPRU - Science Policy Research Unit, University of Sussex Business School.
    • Handle: RePEc:sru:ssewps:2013-13
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    File URL: http://www.sussex.ac.uk/spru/documents/2013-13-swps-storey.pdf
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    More about this item

    Keywords

    Occupational choice; Self-employment; entrepreneurship; entrepreneural skills; Spanish economy;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity

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