Paper #1841

Title:

Are entrepreneurs more upwardly mobile?

Authors:

Matthew J. Lindquist and Theodor Vladasel

Date:

June 2022

Abstract:

Entrepreneurship is often hailed as a path to upward intergenerational mobility, but few studies have explicitly tested this belief. We study intergenerational income rank mobility among entrepreneurs and employees in Sweden using high-quality measures of lifetime income for 215,000 father-son pairs. Incorporated entrepreneurs are more upwardly mobile than wage earners; this result is driven by selection and not by the causal impact of entrepreneurship on upward intergenerational mobility. By contrast, unincorporated entrepreneurs are more downwardly mobile, a result explained by selection, income underreporting, and lower returns to skills and education.

Keywords:

Entrepreneurship, incorporation, intergenerational mobility, lifetime income, upward mobility

JEL codes:

L26, J24, J62

Area of Research:

Business Economics and Industrial Organization

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