By Gerrit de Wit
This e-book is the results of 5 years of analysis that I performed as a study fellow on the college of Economics and Econometrics of the college of Amsterdam. The venture was once initiated in 1986 by way of Frans van Winden and Roy Thurik. Frans van Winden got interested in self employment via his paintings pertaining to govt habit. within the types that he employs, the govt. is encouraged via numerous social teams, the political power of that's concerning their measurement. As this type of is the crowd of self-employed participants, he got interested in determinants of the dimensions of this team. Roy Thurik used to be professionally drawn to the topic due to his paintings on the learn Institute for Small and Medium-sized enterprise within the Netherlands (EIM), an institute that does a lot learn during this quarter. jointly, they wrote an offer for a study undertaking, for which they got investment from the Dutch Ministry of monetary Affairs . those cash have been supplemented through the college of Amsterdam and at a later degree by means of the association for the development of study within the financial self-discipline (ECOZOEK), that's a part of the Netherlands association for clinical examine (NWO). This aid is gratefully acknowiedged. the industrial variation of this e-book was once partIy financed via the Centre for strength Conservation and Environmental expertise (CE), the heart for learn in Experimental Economics and Political Decisionmaking (CREED), and the collage of Amsterdam.
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Extra resources for Determinants of Self-employment
1 Qualitative description Roughly, the model works as follows. An arbitrary number of m sectors of production and n groups of identical individuals are distinguished. The sectors are characterized by different production functions. The socia! 48 Chapter 3 groups are characterized by the utility functions, productive performance and entrepreneurial abilities of their members. Given these characteristics and the assumption that all individuals seek to maximize their utility, it is determined what profession the individuals will choose.
The latter condition ensures that of each group labor is needed in at least one sector . Note that it is allowed that 1: (Xjj = 0 for some sectors: in those sectors only one-person firms occur. 1=1 1=1 J=1 The choice of production function implies a substitution elasticity (J between capital and labor equal to 1. 3], at least in this respect the choice of production function is reasonable. The risk involved in self-employment is modeled by introducing uncertainty in the production function (cf.
In the model ex-post flexibility is assumed (cf. 6), that is, selfemployed individuals may decide on the desirable level of capital and labor inputs after their entrepreneurial abilities have become dear. t, 02). t+ Iha2) and v(O) = exp(a2)-1. An m-sector, n-group behavioral model of self-employment 51 factor markets. Thus, given the discovered entrepreneurial ability f)ij' the product price Pi' the rental price of capital Pij r, and the wage rates Wk and assuming profit maximization - the self-employed individual will require capital and labor up to the point where = plJ..
Determinants of Self-employment by Gerrit de Wit