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What is the impact from entrepreneuship on the income inequality in Chile?
Abstract
El objetivo de este artículo es cuantificar el impacto del emprendimiento en la desigualdad de ingresos en Chile. Utilizando datos de la Nueva Encuesta Suplementaria de Ingresos del 2011 al 2014, confirmamos que el emprendimiento contribuye a dicha desigualdad. Más aun, el emprendimiento genera diferentes impactos dependiendo si se trata de empleador o autoempleado. Nuestros resultados muestran que la condición de empleadores explica un 3,18% de la desigualdad total mientras que los trabajadores por cuenta propia un 0,88%. Sin embargo, al considerar la concentración de capital que se desprende del ingreso no autónomo, ya sea a través del retorno de capital o rentas, entonces la contribución del emprendimiento llega al 13,70%.
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Preface Introduction Economic Growth and Entrepreneurial Activity: Symbiosis in Action Nascent Entrepreneurs and Business Start-ups Transformation of Business Start-ups to Fledgling New Firms Fledgling New Firms: Growth after Birth Fledgling New Firms: Persistence after Birth Written with Mary Williams Entrepreneurial Processes and Outcomes: The Influence of Gender by Nancy Carter Entrepreneurial Processes and Outcomes: The Influence of Ethnicity Overview: The Entrepreneurial Engine and Implications Appendix: Future Research on the Entrepreneurial Process References Index
El trabajo cuantifica la participación de los súper ricos (1%, 0,1% y 0,01% más ricos) de Chile en el ingreso total, de forma de poder compararla con las mediciones disponibles para otros países. Esto aporta una nueva dimensión de la concentración del ingreso
nacional que va más allá de las estimaciones convencionales basadas en quintiles o deciles de
ingreso y el coeficiente GINI que en Chile utilizan los datos de la encuesta CASEN. Adicionalmente, se estima aquí un nuevo coeficiente de Gini corregido, el que, a diferencia de otras estimaciones, incorpora los estratos más ricos de la población. Estas mediciones se hacen para cada año en el periodo 2006-2010. Los resultados muestran que en Chile los problemas más serios de concentración de la riqueza se encuentran en el 1% más rico de la población y que, comparado con los países para los cuales existen estimaciones de la distribución de ingresos comparables, la de Chile es la más altamente concentrada para los estratos más ricos de la población (1%, 0,1% y 0,01%).
Wealth ownership in the United States has long been concentrated in the hands of a small minority of the population, yet researchers have paid relatively little attention to the causes and consequences of this inequality. In this essay, we review the literature that does exist on wealth accumulation and distribution. We begin with an examination of the reasons that wealth inequality has received little empirical attention. We then discuss methods of creating empirical estimates of wealth accumulation and distribution, and we present some estimates of recent trends in wealth inequality. We explore a diverse collection of research that explains these trends, covering treatments of aggregate influences and individual and household factors. We conclude the chapter with a review of research on intergenerational processes and wealth mobility.
This paper discusses the relationships between stage of development in organizational life cycles and organizational effectiveness. We begin the paper by reviewing nine models of organizational life cycles that have been proposed in the literature. Each of these models identifies certain characteristics that typify organizations in different stages of development. A summary model of life cycle stages is derived that integrates each of these nine models.
Next, a framework of organizational effectiveness developed by Quinn and Rohrbaugh is introduced. This framework organizes criteria of effectiveness into four models—rational goal, open systems, human relations, and internal processes models. We hypothesize that certain of the models are important in evaluating the effectiveness of organizations in particular life cycle stages but not in others. The analysis of a state agency's development over five years provides some evidence to support these hypothesized relationships between life cycle stages and criteria of effectiveness.
We conclude that major criteria of effectiveness change in predictable ways as organizations develop through their life cycles. Some shifts in state of development are resisted by the organization much more than are others, and intervention into organizations may be needed to help make the transitions less painful and costly. We also discuss why the predictions of contingency theory often are not substantiated by research because the responses of organizations to the external environment vary in different life cycle stages.
The UK, like most developed economies has an ageing population. In 1901 nearly one in seven were aged 50 and over but by 1997 this had doubled to one in three (ONS 1999) a trend that will continue over the next twenty years (Scase 1999:13). Accompanying this shift has been a burgeoning debate on the roles and involvement of older people in society and the economy (Laslett 1996; Phillipson 1998). Many of the themes in this debate, however, are contradictory. For example, self-definitions and cultural constructs associated with older people often emphasise growing old as liberating.
Possible explanations fur earnings differentials in self-employment and paid employment are investigated. The empirical results suggest that the nonpecuniary benefits of self-employment are sub-stantial: Most entrepreneurs enter and persist ill business despite the fact that they have both lower initial earnings and lower earnings growth than in paid employment, implying a median earnings differential of 35 percent for individuals in business for 10 years. The differential cannot be explained by the selection of low-ability employees into self-employment and is similar for three alternative measures of self-employment earnings and across industries. Furthermore, the estimated earnings differentials may understate the differences in compensation across sectors since fringe benefits are not included in the measure of employee compensation.
This paper analyses the importance of entrepreneurs for job creation and wage growth. Relying on unique data that cover all establishments, firms and individuals in the Danish private sector, we are able to distil a number of different subsets from the total set of new establishments – subsets which allow us to more precisely capture the "truly new" or "entrepreneurial" establishments than in previous studies. Using these data, we find that while new establishments in general account for one third of the gross job creation in the economy, entrepreneurial establishments are responsible for around 25% of this, and thus only account for about 8% of total gross job creation in the economy. However, entrepreneurial establishments seem to generate more additional jobs than other new establishments in the years following entry. Finally, the jobs generated by entrepreneurial establishments are to a large extent low-wage jobs, as they are not found to contribute to the growth in average wages.
The central hypothesis of this paper is that high income inequality in Latin America contributes to intense political pressures for macroeconomic policies to raise the incomes of lower income groups, which in turn contributes to bad policy choices and weak economic performance. The paper looks in detail at one common type of policy failure: the populist policy cycle. This particular type of Latin American policymaking, characterized by overly expansionary macroeconomic policies which lead to high inflation and severe balance of payments crises, has been repeated so often, and with such common characteristics, that it plainly reveals the linkages from social conflict to poor economic performance.
Presents preliminary analysis of a pilot research program in development, that uses a new survey research technique to investigate the factors that lead individuals to start firms. It seeks to analyze data about the gestation process that precedes firm creation. Previous models are found not to be very successful for prediction and are at odds with the unique combinations of events leading to firm formation reported in personal accounts.Describes the data issues, such as the treatment of self-employment as small business ownership or entrepreneurship. A sample of nascent U.S. entrepreneurs was developed from the 1993 University of Michigan Survey of Consumers. Statistically significant differences associated with prevalence of nascent entrepreneurs were identified. The Automatic Interaction Detection (AID) technique is used to identify the major combinations among multiple independent variables affecting the decision to start a firm. The analysis indicates the significance of two variables relating to new-firm startup: unemployment and personal liquidity. Results indicate most efforts to start firms are not begun by the unemployed. The amount of variance explained by increased personal liquidity is modest. The AID technique has identified unique situations where participation in startups is increased. Concludes that participation in the entrepreneurial process is a major activity in the U.S. workforce, and is concentrated among young adults. The process leading to startups reflects personal, life course, and contextual variables that fall into a small number of well-defined groups. (TNM)
This paper disaggregates the income of individuals or households into different factor components, such as earnings, investment income, and transfer payments, and considers how to assess the contributions of these sources to total income inequality. In the approach adopted, a number of basic principles of decomposition are proposed and their implications for the assignment of component contributions are examined.
The aim of this study is to provide a microeconomic investigation of the concept of entrepreneurship; in particular, the following
issues will be discussed: (i) the alternative ways of looking at entrepreneurship, distinguishing “creative destruction” from
simple “turbulence”; (ii) the different microeconomic determinants of new firm formation, distinguishing “progressive” from
“regressive” drivers; (iii) the relationship between ex-ante characteristics (of the founder) and post-entry performance (of
the new firm); and (iv) the possible scope for an economic policy aimed at maximizing the impact of entrepreneurship on economic
growth. Where possible and appropriate, throughout the article, particular attention will be devoted to the specific features
characterizing entrepreneurship in developing countries.
The outside opportunity structure is important in predicting the likelihood and direction of job change but has received little
attention. We view the ecology of organizations as a determinant of worker expectations of outside opportunity and connect
characterizations of organizational size diversity and inequality with job matching and firm reputation theory on how worker
expectations are affected by organizational characteristics. This leads to the predictions that greater organizational diversity
and inequality within a sector of the labor market will cause more intrasector job changes and fewer intersector job changes.
We test these predictions on intra- and interindustrial and regional job changes, yielding supportive results on both industrial
and geographical job mobility. Comparison of the results suggests stronger evidence in favor of reputation than matching theory.
This paper links research on political processes in organizations with research on organizational life cycles and strategic change. It is proposed that politics accompany strategic changes but are manifested differently at each stage of an organization's life cycle. A political life cycle model is developed in which contextual factors and strategic choices work together to evoke different political tactics during each period of the life cycle. The implications of this model for practicing managers and for research are addressed.
Although the literature on occupational mobility distinguishes between structural and circulation (or exchange) mobility, previous methods for simultaneously considering these are inadequate. In this article, nonlinear models of association are combined with linear models for logits of marginal distributions, resulting in models with parameters directly interpretable in terms of association or structural mobility. Goodman's work on combining categories in mobility tables to handle the case where the marginal distributions are also of interest is extended. Extensions to sets of mobility tables are considered next. The article shows finally hour to model cross-national variation in association and structural mobility.
The paper formulates a self-employment/paid-employment choice problem that draws upon Knight's notion that the individual responds to the risk-adjusted relative earnings opportunities in each sector. Based on a development of such choice-theoretic considerations, an econometric model is developed with the purpose of empirically examining the determinants of self-employment. The model features simultaneous determination of employment status and earnings, which allows for self-selectivity. The model is estimated using a sample of 4762 individuals from the General Household Survey for 1978. The estimation of the earnings equation enables a calculation of the self-employment/paid-employment earnings differential and the estimated probit equation for self-employment/paid-employment status facilitates the prediction of the probability of self-employment. The paper finds that there is positive selection bias in the observed earnings of employees, that the probability of self-employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self-employment.
Economic activity rates among older men have declined rapidly in recent decades, presenting major challenges for individuals and society. One solution suggested to the problems of a lack of full-time permanent jobs for older men has been more flexible ways of working such as portfolio careers, freelancing and consulting for those nearing retirement age. But there has been a lack of research examining the realities of flexible working for the 50-plus age group. This article examines the experiences of older professionals as freelancers in the UK media industry where such working practices have long been common. By examining this relationship from the employer’s and older freelancer’s perspective, this article aims to discover the true extent of choice, freedom and autonomy experienced by portfolio professionals in late career.
We use open-ended interviews and focus groups to construct a composite model of activities constituting the entrepreneurial process for seven retirees from a Fortune 100 corporation who started second-career businesses. Our results show that retirees’ prior employment experience modifies the nature of entrepreneurial processes used to get into business. Technology-oriented retirees followed incremental processes, using fewer steps in the process, with an indeterminate inception in the development of required skills, in starting related-lifestyle businesses. Retirees with management skills used punctuated equilibrium processes, having an abrupt beginning and requiring more steps in the process of starting unrelated-growth/investment businesses. Management-oriented retirees networked more In the entrepreneurial process than technology-oriented retirees. Technology-oriented retirees more likely viewed departure as involuntary; their entrepreneurial processes derived from starting conditions (e.g., old job or company). Retirees with management skills tended to view departure as voluntary; their entrepreneurial processes advanced toward desired end states. We identify propositions for future testing and discuss implications for corporations, retirees, and researchers.
Establishes the link between entrepreneurship and corporate management, in order to provide a context for corporate entrepreneurship. A review of entrepreneurship literature identifies several underlying themes that pertain to corporate entrepreneurship. The first theme is what happens when entrepreneurs act. Economics is used to explore this question. Two major contributions have resulted from the analysis in this area: (1) entrepreneurship is the function by which growth is achieved, and (2) there is a distinction between an entrepreneur and a manager. The second category is why entrepreneurs act. Through studies in psychology and sociology, the importance of the individual and the relevance of environmental variables have been highlighted. Finally, the question of how they act has been studied through the discipline of management. Using this previous research, the following is proposed as a definition of entrepreneurship: "a process by which individuals – either on their own or inside organizations – pursue opportunities without regard to the resources they currently control." Based on this definition, six propositions concerning corporate entrepreneurship are presented. Detection of the opportunity, willingness to pursue the opportunity, and the confidence and possibilities of succeeding are key components in the process of corporate entrepreneurship. (SRD)
Schumpeter first reviews the basic economic concepts that describe the recurring economic processes of a commercially organized state in which private property, division of labor, and free competition prevail. These constitute what Schumpeter calls "the circular flow of economic life," such as consumption, factors and means of production, labor, value, prices, cost, exchange, money as a circulating medium, and exchange value of money. The principal focus of the book is advancing the idea that change (economic development) is the key to explaining the features of a modern economy. Schumpeter emphasizes that his work deals with economic dynamics or economic development, not with theories of equilibrium or "circular flow" of a static economy, which have formed the basis of traditional economics. Interest, profit, productive interest, and business fluctuations, capital, credit, and entrepreneurs can better be explained by reference to processes of development. A static economy would know no productive interest, which has its source in the profits that arise from the process of development (successful execution of new combinations). The principal changes in a dynamic economy are due to technical innovations in the production process. Schumpeter elaborates on the role of credit in economic development; credit expansion affects the distribution of income and capital formation. Bank credit detaches productive resources from their place in circular flow to new productive combinations and innovations. Capitalism inherently depends upon economic progress, development, innovation, and expansive activity, which would be suppressed by inflexible monetary policy. The essence of development consists in the introduction of innovations into the system of production. This period of incorporation or adsorption is a period of readjustment, which is the essence of depression. Both profits of booms and losses from depression are part of the process of development. There is a distinction between the processes of creating a new productive apparatus and the process of merely operating it once it is created. Development is effected by the entrepreneur, who guides the diversion of the factors of production into new combinations for better use; by recasting the productive process, including the introduction of new machinery, and producing products at less expense, the entrepreneur creates a surplus, which he claims as profit. The entrepreneur requires capital, which is found in the money market, and for which the entrepreneur pays interest. The entrepreneur creates a model for others to follow, and the appearance of numerous new entrepreneurs causes depressions as the system struggles to achieve a new equilibrium. The entrepreneurial profit then vanishes in the vortex of competition; the stage is set for new combinations. Risk is not part of the entrepreneurial function; risk falls on the provider of capital. (TNM)
In this article, we combine perspectives from labor economics and entrepreneurship to examine early retirees’ decision to become self-employed. Many individuals leave career employment before the traditional age of 65 and return to the labor market for a period of time before they fully retire. This phenomenon is referred to in the labor economics literature as bridge employment. Initial research of bridge employment has identified entrepreneurial activities to be common. The authors argue that first early retirees have to make the decision whether to permanently retire or to continue their labor force participation. If they decide to return to work, then self-employment is one option. Using the theoretical foundations of entrepreneurship, the authors outline the factors that would influence the self-employment choice and the types of entrepreneurial paths emanating from that choice.
This article uses inequality decomposition techniques in order to analyze the consequences of entrepreneurial activities to
household income inequality in southern Ethiopia. A uniform increase in entrepreneurial income reduces per capita household
income inequality. This implies that encouraging rural entrepreneurship may be favorable for both income growth and income
distribution. Such policies could be particularly successful if directed at the low-income, low-wealth, and relatively uneducated
segments of the society.
Here, I examine returns to entrepreneurship using a standard measure of welfare, the per-capita consumption expenditure. This
analysis, using quantile regressions, reveals the existence of a welfare hierarchy in occupations. The results suggest that,
across the welfare distribution, entrepreneurs who employ others have the highest returns in terms of consumption, while those
entrepreneurs who work for themselves, that is, self-employed individuals, have slightly lower returns than the salaried employees.
However, self-employment entails higher returns than casual labor and a relative escape from poverty.
In this paper, we formalize the view that economic development requires high rates of productive entrepreneurship, and this requires an efficient matching between entrepreneurial talent and production technologies. We first explore the role of financial development in promoting such efficient allocation of talent, which results in higher production, job creation, and social mobility. We then show how different levels of financial development may endogenously arise in a setting in which financial constraints depend on individual incentives to misbehave, these incentives depend on how many jobs are available, and this in turn depends on the level of financial development. Such complementarity between labor market and financial market development may generate highly divergent development paths even for countries with very similar initial conditions. oui
The basic hypothesis is that, while the total supply of entrepreneurs varies among societies, the productive contribution of the society's entrepreneurial activities varies much more because of their allocation between productive activities, such as innovation, and largely unproductive activities, such as rent seeking or organized crime. This allocation is heavily influenced by the relative payoffs society offers to such activities. This implies that policy can influence the allocation of entrepreneurship more effectively than it can influence its supply. Historical evidence from ancient Rome, early China, and the Middle Ages and Renaissance in Europe is used to investigate the hypotheses. Copyright 1990 by University of Chicago Press.
In the early 1970s the proportion of the nonagricultural labor force self-employed in the United States ceased its downward trend and has been rising ever since. This study provides an analysis of the causes of this change. A general-equilibrium model of self- employment and wage employment is analyzed, and aggregate U.S. time- series data are used to test predictions derived from the model. The empirical analysis indicates that changes in technology, industrial structure, tax rates, and social-security retirement benefits have contributed to the reversal of the previous downward trend, which had persisted for over a century. Copyright 1987 by University of Chicago Press.
The objective of this paper is to investigate the "conventional wisdom" that there is a policy conflict between the reduction of inequality and the encouragement of entrepreneurial risk taking. The paper attempts to provide a precise statement of this conflict in the context of the progressivity of tax regimes. Using the method of inequality decomposition analysis, a taxonomy is developed which locates the sources of the policy conflict in a precise fashion. A detailed analysis then shows that the conventional wisdom is misleading if not wrong, and that in many cases the claimed policy conflict is quite simply illusory.
We use data from the National Longitudinal Surveys to investigate the relative importance of family financial and human capital in the transition into self-employment. Specifically, we estimate the impacts of individual's own wealth and human capital and parental wealth and self-employment experience on the probability that an individual transits from wage-and-salary to self-employment. We find young men's own financial assets exert a statistically significant but quantitatively modest effect on the transition. In contrast, the parents' capital exerts a large influence. Parents' strongest effect runs, not through financial means, but rather through their own self-employment experience and business success. Copyright 2000 by University of Chicago Press.
This article argues that domestic social conflicts are a key to understanding why growth rates lack persistence and why so many countries have experienced a growth collapse since the mid-1970s. It emphasizes, in particular, the manner in which social conflicts interact with external shock on the one hand, and the domestic institutions of conflict-management on the other. Econometric evidence provides support for this hypothesis. Countries that experienced the sharpest drops in growth after 1975 were those with divided societies (as measured by indicators of inequality, ethnic fragmentation, and the like) and with weak institutions of conflict management (proxied by indicators of the quality of governmental institutions, rule of law, democratic rights, and social safety nets). Copyright 1999 by Kluwer Academic Publishers
We introduce a new, integrated regression-based approach for decomposing inequality indices with household-level data, and we examine the strengths and weaknesses of inequality decompositions by income source in light of the way that they are commonly interpreted. The approach uses estimated income flows from variables in linear income equations to decompose aggregate inequality indices. The integrated approach provides an efficient and flexible way to quantify the roles of variables like education education, age, infrastructure, and social status in a multivariate context.
This paper conducts an empirical analysis of the importance of entrepreneurship for wealth concentration and mobility using data from the Panel Study of Income Dynamics. The data shows a marked concentration of wealth in the hands of entrepreneurs which is not merely a consequence of their higher incomes. The higher saving rates among entrepreneurs is one of the possible explanations for their higher asset holdings and this hypothesis is supported by the statistical tests conducted in the paper. The data also shows that entrepreneurs experience greater upward mobility in that they have a greater probability of moving to higher wealth classes, and this is not only a consequence of their higher incomes. Copyright 1999 by The International Association for Research in Income and Wealth.
This paper applies the techniques of stochastic optimal control to the problem of price-taking agents choosing the optimal balance between self-employment and paid employment. The two principal innovations are the development of an intertemporal optimizing model for heterogeneous agents under conditions of uncertainty, and the application of multivariate maximum likelihood cointegration techniques to test the model and to obtain estimates of the long-run and short-run determinants of self-employment. Both risk and expected returns are found to affect the numbers in self-employment in the long run; there is also evidence that the interest rate acts as a barrier to entry in reducing self-employment in the short run and the long run. Copyright 1996 by The London School of Economics and Political Science.
Problems of inequality related to the disaggregation of Gini coefficients are examined. Measures of inequality can be decomposed so that in a grouped population, total inequality depends on inequality within and between groups. No such decomposition is available for the Gini coefficient, yet its direct relationship to the Lorenz curve has resulted in persistent attempts to derive a disaggregation that can be used in empirical work. The Gini coefficient can be interpreted in terms of the average expected gain from having the option of receiving the income of some other random individual. Variation within the components of the expression for the Gini coefficient contributes to overall inequality. The decomposition of the Gini coefficient further identifies the inequality within a population and may have particular relevance to studies of migration and discrimination. If migration includes movement from one income group to another or a change in educational status, the migration can be viewed in terms of expected gains for those individuals who are migrating. These expected gains for individuals can then be considered in terms of a statistical game framework. Statistical data are included. 12 references.
We present evidence that measures of "social cohesion," such as income inequality and ethnic fractionalization, endogenously determine institutional quality, which in turn causally determines growth. Copyright 2006 Blackwell Publishing Ltd.
This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this paper draws the following conclusions from the literature. Firstly, different patent policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.
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