The perceived well-being and health costs of exiting self-employmentNikolova, M., Nikolaev, B. & Popova, O., 4-Jul-2020, In : Small Business Economics. 18 p.
Research output: Contribution to journal › Article › Academic › peer-review
We explore how involuntary and voluntary exits from self-employment affect life and health satisfaction. To that end, we use rich longitudinal data from the German Socio-Economic Panel from 1985 to 2017 and a difference-in-differences estimator. We find that while transitioning from self-employment to salaried employment brings small improvements in health and life satisfaction, the negative psychological costs of business failure (i.e., switching from self-employment to unemployment) are substantial and exceed the costs of involuntarily losing a salaried job. Meanwhile, leaving self-employment has no consequences for self-reported physical health and behaviors such as smoking and drinking, implying that the costs of losing self-employment are mainly psychological. Moreover, former business owners fail to adapt to an involuntary self-employment exit even 2 or more years after this traumatic event. Our findings imply that policies encouraging entrepreneurship should also carefully consider the nonmonetary implications of business failure.
|Number of pages||18|
|Journal||Small Business Economics|
|Early online date||4-Jul-2020|
|Publication status||Published - 4-Jul-2020|
- Entrepreneurship, Self-employment, Health, Well-being, Unemployment, Job switches, JOB-SATISFACTION, BUSINESS FAILURE, LIFE SATISFACTION, UNEMPLOYMENT, ENTREPRENEURS, ADAPTATION, WORK, EXPERIENCE, HAPPINESS, FOUNDERS