Start-Ups

The Return-To-Entrepreneurship Puzzle

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Executive Summary

The returns to entrepreneurship are monetary and non-monetary. The authors offer new evidence on these returns using a large sample of genetically identical male twins. The within-twin analysis suggests that OLS estimates are downwards, and traditional first-differenced panel data estimates upwards biased. They find no differences in the earnings of men with either low or high education. The within-twin analysis of non-monetary returns shows that entrepreneurs with low education work longer hours and have greater responsibilities, but also face a reduced risk of divorce and less monotonous work tasks. The same does not apply to highly educated entrepreneurs.

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