http://repub.eur.nl/res/concept/jel-J2/ Recent publications classified by JEL Code J2 en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/39185/ 2013-02-26T00:00:00Z Wealthier individuals engage in healthier behavior. This paper seeks to explain this phenomenon by developing a theory of health behavior, and exploiting both lottery winnings and inheritances to test the theory. We distinguish between the direct monetary cost and the indirect health cost (value of health lost) of unhealthy consumption. The health cost increases with wealth and the degree of unhealthiness, leading wealthier individuals to consume more healthy and moderately unhealthy, but fewer severely unhealthy goods. The empirical evidence presented suggests that differences in health costs may indeed provide an explanation for behavioral differences, and ultimately health outcomes, Kippersluis, J.L.W. van Galama, T.J. http://repub.eur.nl/res/pub/37161/ 2012-08-01T00:00:00Z Deciding how much to save for retirement is a difficult task that includes many uncertainties. In this paper, we use data from a representative Dutch household panel to study the impact of uncertainty regarding one's savings adequacy on retirement savings contributions and information search processes. We combine ideas from the literature in psychology and economics that provide opposing predictions regarding the impact of uncertainty on retirement savings contributions. Our results indicate that the effect of uncertainty is moderated by two factors: an individual's perceived adequacy of current savings and that individual's financial constraints. In particular, we find that uncertainty increases retirement contributions for those who believe that they save adequately; however, it hinders retirement contributions for those who believe that they save inadequately. This effect of uncertainty is further moderated by the availability of financial means: a reduction in uncertainty results in greater contributions to savings only when financial constraints are absent. We also find that uncertainty has both indirect and direct effects on savings information search. In particular, uncertainty indirectly affects savings information search because it impacts individuals' intentions to save, which consequently forces individuals to engage in purchase-oriented information search; however, uncertainty also has a direct effect because individuals engage in ongoing information search processes to directly reduce uncertainty. The implications of these findings are discussed. Schie, R.J.G. van Donkers, A.C.D. Dellaert, B.G.C. http://repub.eur.nl/res/pub/34712/ 2012-07-20T00:00:00Z We study career choice when competition for promotion is a contest. A more meritocratic profession always succeeds in attracting the highest ability types, whereas a profession with superior promotion benefits attracts high types only if the hazard rate of the noise in performance evaluation is strictly increasing. Raising promotion opportunities produces no systematic effect on the talent distribution, while a higher base wage attracts talent only if total promotion opportunities are sufficiently plentiful Morgan, J. Sisak, D. Vardy, F. http://repub.eur.nl/res/pub/37297/ 2012-05-01T00:00:00Z We model entrepreneurship and the emergence of firms as an outcome of simultaneous bidding for labor services among heterogeneous agents. What distinguishes our approach from prior work is that occupational choice and job matching are determined simultaneously, so that the opportunity costs of entrepreneurs are accounted for. Those who are relatively unmanageable, while possibly excellent managers themselves, become entrepreneurs. Entrepreneurs compete and create value by building efficient organizations and offering potentially well-paid jobs to others. While the entry of an additional entrepreneur typically reduces some individual wages, we show that it always raises the average wage and depresses the average income of incumbent entrepreneurs. This result may help explain the empirically low returns to entrepreneurship. Roessler, C. Koellinger, Ph.D. http://repub.eur.nl/res/pub/23503/ 2012-04-01T00:00:00Z In the media role models are increasingly being acknowledged as an influential factor in explaining the reasons for the choice of occupation and career. Various conceptual studies have proposed links between role models and entrepreneurial intentions. However, empirical research aimed at establishing the importance of role models for (nascent) entrepreneurs is scarce. Knowledge of the presence of entrepreneurial role models, their specific functions and characteristics is therefore limited. Our explorative empirical study is a first step towards filling this gap. Our study is based on the outcomes of a questionnaire completed by a representative sample of 292 entrepreneurs in three major Dutch cities – entrepreneurs who have recently started up a business in the retail, hotel and restaurant sectors, business services and other services. We provide indications of the presence and importance of entrepreneurial role models, the function of these role models, the similarity between the entrepreneur and the role model, and the strength of their relationship. Highlights ► Role models emerge as influential factors in individual decision making. ► However, empirical knowledge of entrepreneurial role models is limited. ► We explore impacts, functions and characteristics of entrepreneurial role models. ► We find that role models often influence others in their decision to start a firm. ► Role models tend to be next-door examples and fulfill several functions. Bosma, N. Hessels, S.J.A. Schutjens, V. Praag, M. van Verheul, I. http://repub.eur.nl/res/pub/37701/ 2012-04-01T00:00:00Z Using matched firm-worker data from Danish manufacturing, we observe firm-to-firm worker movements and find that firms that hired workers from more productive firms experience productivity gains one year after the hiring. The productivity gains associated with hiring from more productive firms are equivalent to 0.35 percent per year for an average firm. Surviving a variety of statistical controls, these gains increase with education, tenure, and skill level of new hires, persist for several years after the hiring was done, and remain broadly similar for different industries and measures of productivity. Competing explanations for these gains, knowledge spillovers in particular, are discussed. Stoyanov, A. Zubanov, N.V. http://repub.eur.nl/res/pub/37296/ 2012-02-23T00:00:00Z We model entrepreneurship and the emergence of …rms as an out- come of simultaneous bidding for labor services among heterogeneous agents. What distinguishes our approach from prior work is that oc- cupational choice and job matching are determined simultaneously, so that the opportunity costs of entrepreneurs are accounted for. Those who are relatively unmanageable, while possibly excellent managers themselves, become entrepreneurs. Entrepreneurs compete and create value by building e¢ cient organizations and o¤ering potentially well- paid jobs to others. While the entry of an additional entrepreneur typically reduces some individual wages, we show that it always raises the average wage and depresses the average income of incumbent en- trepreneurs. This result may help explain the empirically low returns to entrepreneurship. Roessler, C. Koellinger, Ph.D. http://repub.eur.nl/res/pub/38384/ 2012-01-01T00:00:00Z Abstract. Globalization has led to a precarization of labour, which especially manifests in the unstable working conditions, a lower labour share in national income as well as in a growing income inequality, with the exception of some countries with high initial income inequality. The neglect of concern for employment and inequality in the formulation of the Millennium Development Goals (MDGs) in 2000 is noted; the addition of a goal for full employment in a reformulation of the MDGs in 2005 did not lead to a change in focus in official development assistance (ODA). If the growing concern for employment and inequality is taken seriously, a refocus of development efforts is necessary, combining a greater share of development assistance for employment and productivity enhancing activities with a change in national and international economic and financial policies, so as to make employment creation (together with poverty reduction) an overarching goal. Hoeven, R.E. van der http://repub.eur.nl/res/pub/37308/ 2011-12-22T00:00:00Z Using data from representative population surveys in 17 countries, we find that the lower rate of female business ownership is primarily due to women's lower propensity to start businesses rather than to differences in survival rates across genders. We show that women are less confident in their entrepreneurial skills, have different social networks and exhibit higher fear of failure than men. After controlling for endogeneity, we find that these variables explain a substantial part of the gender gap in entrepreneurial activity. Although, of course, their relative importance varies significantly across countries, these factors appear to have a universal effect. Koellinger, Ph.D. Minniti, M. Schade, C. http://repub.eur.nl/res/pub/26527/ 2011-10-01T00:00:00Z Ill-health can be expected to reduce employment and income. But are the effects sustained over time? Do they differ across the income distribution? And are there spillover effects on the employment and income of the spouse? We use matching combined with difference-in-differences to identify the causal effects of sudden illness, represented by acute hospitalisations, on employment and income up to six years after the health shock using linked Dutch hospital and tax register data. On average, an acute hospital admission lowers the employment probability by seven percentage points and results in a 5% loss of personal income (30% for those entering disability insurance) two years after the shock. There is no subsequent recovery in either employment or income. The distribution of ill-health contributes to income inequality: a health shock is both more likely to occur and to have a larger relative impact on employment and income at the bottom of the income distr ibution. There are large spillover effects: household income falls by 50% more than the income of the disabled person, and the employment probability of the spouse is reduced by 1.5 percentage points. The negative spousal employment effect is larger for male than for female spouses and in higher income households. García-Gómez, P. Kippersluis, J.L.W. van O'Donnell, O.A. Doorslaer, E.K.A. van http://repub.eur.nl/res/pub/25709/ 2011-07-01T00:00:00Z Recent studies have demonstrated the importance of good management for firm performance. Here, we focus on management in not-for-profits (NFPs). We present a model predicting that management quality will be lower in NFPs compared to for-profits (FPs), but that outputs may not be worse if managers are altruistic. Using a tried and tested survey of management practices, we find that NFPs score lower than FPs but also that, while the relationship between management scores and outputs holds for FPs, the same is not true for NFPs. One implication is that management practices that work for FPs may be less effective in driving performance in NFPs. Delfgaauw, J. Dur, A.J. Propper, C. Smith, S. http://repub.eur.nl/res/pub/22907/ 2011-04-01T00:00:00Z In the media role models are increasingly being acknowledged as an influential factor in explaining the reasons for the choice of occupation and career. Various conceptual studies have proposed links between role models and entrepreneurial intentions. However, empirical research aimed at establishing the importance of role models for (nascent) entrepreneurs is scarce. Knowledge of the presence of entrepreneurial role models, their specific functions and characteristics is therefore limited. Our explorative empirical study is a first step towards filling this gap. Our study is based on the outcomes of a questionnaire completed by a representative sample of 292 entrepreneurs in three major Dutch cities - entrepreneurs who have recently started up a business in the retail, hotel and restaurant sectors, business services and other services. We provide indications of the presence and importance of entrepreneurial role models, the function of these role models, the similarity between the entrepreneur and the role model, and the strength of their relationship. Bosma, N. Hessels, S.J.A. Schutjens, V. Praag, M. van Verheul, I. http://repub.eur.nl/res/pub/22553/ 2011-02-04T00:00:00Z This paper explores the interaction between retirement flexibility and portfolio choice in an overlapping-generations model of a closed economy. Retirement flexibility is often seen as a hedge against capital market risks which justifies more risky asset portfolios. We show, however, that this positive relationship between risk taking and retirement flexibility is weakened - and under some conditions even turned around - if not only capital market risks but also productivity risks are considered. Productivity risk in combination with a high elasticity of substitution between consumption and leisure creates a positive correlation between asset returns and labour income, reducing the willingness of consumers to bear risk. Moreover, it turns out that general equilibrium effects can either increase or decrease the equity exposure, depending on the degree of substitutability between consumption and leisure. Adema, Y. Bonenkamp, J. Meijdam, L. http://repub.eur.nl/res/pub/22556/ 2011-02-01T00:00:00Z Job satisfaction of self-employed and paid-employed workers is analyzed using the European Community Household Panel for the EU-15 covering the years 1994-2001. We distinguish between two types of job satisfaction, i.e. job satisfaction in terms of type of work and job satisfaction in terms of job security. Findings from our generalized ordered logit regressions indicate that self-employed individuals as compared to paid employees are more likely to be satisfied with their present jobs in terms of type of work and less likely to be satisfied in terms of job security. The findings also provide many insights into the determinants of the two types of job satisfaction for both the self-employed and paid employees Millan, J.M. Thurik, A.R. Hessels, S.J.A. Aguado, R. http://repub.eur.nl/res/pub/20324/ 2010-10-01T00:00:00Z The quality of public management is a recurrent concern in many countries. Calls to attract the economy's best and brightest managers to the public sector abound. This paper studies self-selection into managerial positions in the public and private sector, using a model of a perfectly competitive economy where people differ in managerial ability and in public service motivation. We find that, if demand for public sector output is not too high, the equilibrium return to managerial ability is always higher in the private sector. As a result, relatively many of the more able managers self-select into the private sector. Since this outcome is efficient, our analysis implies that attracting a more able managerial workforce to the public sector by increasing remuneration to private-sector levels is not cost-efficient. Delfgaauw, J. Dur, A.J. http://repub.eur.nl/res/pub/22372/ 2010-10-01T00:00:00Z The current wave of globalization has profound labour market effects, accentuated, in many cases, by the current financial and economic crisis. This paper reviews general labour market trends and country examples, arguing that the current globalization process makes labour’s position more precarious, a trend magnified by the current crisis. This is consistent with the policy reactions to the crisis: governments have (rightly) acted as a banker of last resort to avoid the collapse of the financial system, but, despite stimulus plans and monetary easing and some labour market policies, have not really acted as an employer of last resort. Hoeven, R.E. van der http://repub.eur.nl/res/pub/20807/ 2010-08-01T00:00:00Z Entrepreneurs exit their businesses due to selection pressures they experience in the market place. In addition to this well-known ex-post decision to exit, entrepreneurs select ex-ante whether they are willing to pursue an entrepreneurial career at all, or to give up their entrepreneurial intentions. Hardly anything is known about the latter selection process in imagined markets that precedes the creation of variation and selection process in real markets. This article explores these two selection processes using survey data on 20,000 individuals in 27 European countries and the United States in 2007. We distinguish business failure from exit by sell-off. Individuals in the United States are less likely to exit imagined markets and are more likely to exit the real market than are Europeans. Individuals in a corporatist welfare state regime have relatively high chances to exit imagined markets but low chances to exit real markets (due to failure). Business owners in metropolitan and urban environments are more likely to fail than their rural counterparts, while individuals with a high risk tolerance and individuals with a self-employed parent are less likely to exit imagined or real markets (via business failure). In short, this study shows that exit in real and in imagined markets is differently affected by individual characteristics as well as by the competitive and institutional environment. Stam, E. Thurik, A.R. Zwan, P.W. van der http://repub.eur.nl/res/pub/20413/ 2010-07-22T00:00:00Z Understanding of the substantial disparity in health between low and high socioeconomic status (SES) groups is hampered by the lack of a suffciently comprehensive theoretical framework to interpret empirical facts and to predict yet untested relations. We present a life-cycle model that incorporates multiple mechanisms explaining (jointly) a large part of the observed disparities in health by SES. In our model, lifestyle factors, working conditions, retirement, living conditions and curative care are mechanisms through which SES, health and mortality are related. Our model predicts a widening and possibly a subsequent narrowing with age of the gradient in health by SES. Galema, T.J. Kippersluis, J.L.W. van http://repub.eur.nl/res/pub/15775/ 2010-07-14T00:00:00Z We test a new model where the entrepreneurial decision is described as a process of successive engagement levels, i.e. as an entrepreneurial ladder. Five levels are distinguished using nearly 12 000 observations from the 2004 ‘Flash Eurobarometer survey on Entrepreneurship’ covering the 25 European Union member states and the United States. The most surprising of the many results is that perception of lack of financial support is no obstacle for moving to a higher entrepreneurial engagement level whereas perceived administrative complexity is a significant obstacle. We also show that the effect of age on the probability of moving forward in the entrepreneurial process becomes negative after a certain age implying that if entrepreneurial engagements are not taken early enough in life they may well never be taken. Zwan, P.W. van der Thurik, A.R. Grilo, I. http://repub.eur.nl/res/pub/20281/ 2010-07-01T00:00:00Z The validity of family background variables instrumenting education in income regressions has been much criticized. In this paper, we use data of the 2004 German Socio-Economic Panel and Bayesian analysis in order to analyze to what degree violations of the strong validity assumption affect the estimation results. We show that, in case of moderate direct effects of the instrument on the dependent variable, the results do not deviate much from the benchmark case of no such effect (perfect validity of the instrument). The size of the bias is in many cases smaller than the standard error of education’s estimated coefficient. Thus, the violation of the strict validity assumption does not necessarily lead to strongly different results when compared to the strict validity case. This provides confidence in the use of family background variables as instruments in income regressions. Hoogerheide, L.F. Block, J.H. Thurik, A.R.