Do Employers Value Entrepreneurial Human Capital?
An empirical study of post-self-employment wages
Marlena I. Lee
In 2003, 7.5% of the labor force or about 10.3 million workers were self-
Many of these self-employed workers quickly return to paid employment.
Evidence from Canada and Great Britain suggest that average gross flows into and out of
self-employment involves over 40% of self-employed workers each year.
transitory nature of self-employment, a better understanding of the nature of transitions
between self-employment and wage employment is needed. This study attempt to provide
evidence on one aspect of this broader topic: how are wages impacted by self-
The few previous studies that have also looked at how previous self-employment
experience impacts wages have yielded inconclusive evidence. While one study has
found that self-employment experience and wage experience are valued roughly the same
in the US labor market, another study reports that entrepreneurs returning to paid
employment earn a higher wage than employees with similar work experience, education
I am grateful to Erik Hurst for many helpful discussions and am additionally thankful to Gene Fama, John
Heaton, Amee Kamdar, and Toby Moskowitz for many useful comments. Research support from the
Sanford J. Grossman Fellowship in Honor of Arnold Zellner and the Ewing Marion Kauffman Foundation
is gratefully acknowledged. Any opinions expressed herein are the author's.
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