"Status" concerns and self-employment transitions.
Saved in:
| Authors: | Akay, Alpaslan1 (AUTHOR) alpaslan.akay@economics.gu.se, Yilmaz, Levent2 (AUTHOR) levent.yilmaz@plus.ac.at |
|---|---|
| Source: | Small Business Economics. Dec2025, Vol. 65 Issue 4, p2113-2142. 30p. |
| Subject Terms: | *Self-employment, *Occupational prestige, *Economic development, *Income inequality, *Entrepreneurship, Social comparison, Panel analysis, Respect |
| Geographic Terms: | Germany |
| Abstract: | This paper investigates whether individuals' relative (status or positional) concerns are associated with their transitions from paid employment or inactivity to self-employment. The conjecture is that stress and anxiety arising from socio-economic comparisons may be motivating factors for individuals to establish their own businesses. We examine this using the Socio-Economic Panel (SOEP) dataset, a long panel spanning three decades. Employing fixed-effects panel model specifications, we find that an increase in the income and job prestige of comparable others is associated with a higher probability of transitioning from paid employment or inactivity to self-employment. On average, a 10% rise in the income or job prestige of comparable others corresponds to a 7–10% higher likelihood of transitioning to self-employment. These findings are robust across various checks, including estimators, income definitions, and reference groups. The paper also explores catalysing factors such as risk-taking, skills, and autonomy, which moderate the relationship between relative concerns and the transition to self-employment. Plain English Summary: This study investigates whether concerns about socio-economic status influence people's transition from salaried employment to entrepreneurship. Using three decades of nationally representative panel data from Germany, the research finds robust evidence suggesting that socio-economic comparisons may drive individuals to start their own businesses in an effort to "keep up with the Joneses". This effect is large and might benefit the overall economy and society. On average, a 10% increase in the income or job prestige levels of comparable others leads to a 7–10% higher likelihood of transitioning from paid employment or inactivity to self-employment. Policymakers should reconsider the role of socio-economic comparisons when designing programmes to encourage entrepreneurship, as status concerns not only generate stress, anxiety, and unhappiness but also have the potential to stimulate self-employment and economic growth. [ABSTRACT FROM AUTHOR] |
| Database: | Entrepreneurial Studies Source |
|
Full text is not displayed to guests.
Login for full access.
|
|
| Abstract: | This paper investigates whether individuals' relative (status or positional) concerns are associated with their transitions from paid employment or inactivity to self-employment. The conjecture is that stress and anxiety arising from socio-economic comparisons may be motivating factors for individuals to establish their own businesses. We examine this using the Socio-Economic Panel (SOEP) dataset, a long panel spanning three decades. Employing fixed-effects panel model specifications, we find that an increase in the income and job prestige of comparable others is associated with a higher probability of transitioning from paid employment or inactivity to self-employment. On average, a 10% rise in the income or job prestige of comparable others corresponds to a 7–10% higher likelihood of transitioning to self-employment. These findings are robust across various checks, including estimators, income definitions, and reference groups. The paper also explores catalysing factors such as risk-taking, skills, and autonomy, which moderate the relationship between relative concerns and the transition to self-employment. Plain English Summary: This study investigates whether concerns about socio-economic status influence people's transition from salaried employment to entrepreneurship. Using three decades of nationally representative panel data from Germany, the research finds robust evidence suggesting that socio-economic comparisons may drive individuals to start their own businesses in an effort to "keep up with the Joneses". This effect is large and might benefit the overall economy and society. On average, a 10% increase in the income or job prestige levels of comparable others leads to a 7–10% higher likelihood of transitioning from paid employment or inactivity to self-employment. Policymakers should reconsider the role of socio-economic comparisons when designing programmes to encourage entrepreneurship, as status concerns not only generate stress, anxiety, and unhappiness but also have the potential to stimulate self-employment and economic growth. [ABSTRACT FROM AUTHOR] |
|---|---|
| ISSN: | 0921898X |
| DOI: | 10.1007/s11187-025-01051-0 |
