Publication

The perceived well-being and health costs of exiting self-employment

Nikolova, M., Nikolaev, B. & Popova, O., 4-Jul-2020, In : Small Business Economics. 18 p.

Research output: Contribution to journalArticleAcademicpeer-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.

Original languageEnglish
Number of pages18
JournalSmall Business Economics
Early online date4-Jul-2020
Publication statusPublished - 4-Jul-2020

    Keywords

  • Entrepreneurship, Self-employment, Health, Well-being, Unemployment, Job switches, JOB-SATISFACTION, BUSINESS FAILURE, LIFE SATISFACTION, UNEMPLOYMENT, ENTREPRENEURS, ADAPTATION, WORK, EXPERIENCE, HAPPINESS, FOUNDERS

ID: 128752412