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

Milena Nikolova*, Boris Nikolaev, Olga Popova

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

3 Citaten (Scopus)

Samenvatting

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.

Originele taal-2English
Aantal pagina's18
TijdschriftSmall Business Economics
Vroegere onlinedatum4-jul-2020
DOI's
StatusPublished - 4-jul-2020

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