basket cases tax incentives and international joint venture participation by american multinational firms abstract this paper examines the impact of the u s tax reform act of 1986 tra on international joint ventures by american firms the tra mandates the use of separate baskets in calculating foreign tax credits on dividends received from each foreign corporation owned 50 or less by americans which greatly reduces the attractiveness of joint ventures especially those in low tax foreign countries since the effect of the tra on joint ventures varies with foreign tax rates the country level pattern of subsequent joint venture activity illustrates the sensitivity of organizational form to tax considerations the evidence indicates that american participation in international joint ventures fell sharply after 1986 particularly in low tax countries moreover joint ventures in low tax countries use more debt and pay greater royalties to their american parents after 1986 reflecting their incentives to economize on dividend payments

are public sector workers more risk averse than private sector workers available evidence suggests that stability of employment is greater in the public sector than in the private sector the value that individuals place on tbis stability depends on tbe individual s degree of risk aversion economic reasoning suggests tbat otber tbings equal tbose individuals witb a high degree of aversion to risk will be more likely tban otbers to seek employment in the public sector this paper tests tbat hypothesis tbrougb tbe use of probit analysis and a measure of risk aversion developed in ibe university of micbigan s panel study of income dynamics the results tend to confirm tbe bypotbesis implying tbat a policy of intersectoral equality of pay for comparable jobs would result inanexcesssupplyof workers to tbe public sector

incentives productivity and labor contracts the relationship between age earnings profiles and worker incentives is examined by contrasting wage and salary workers with the self employed it is argued that the steepness of wage and salary workers age earnings profiles reflects the desire to provide work incentives to those workers since self employed workers do not face this agency problem they are used as a benchmark to gauge productivity empirical support of the proposition is provided and the effects of human capital accumulation are separated empirically from incentive effects the most important conclusion is that under some strong assumptions most of the slope in age earnings profiles is accounted for by the desire to provide incentives rather than by on the job training

preserving religious identity through education economic analysis and evidence from the us abstract this paper models the decision of religious parents to send their children to private religious schools as reflecting their desire to shield their children from external influences and thus preserve their religious identity it follows that when the share of the minority in the local population grows and outside influences become less threatening the demand for separate religious schooling among the members of the religious group decreases this pattern implies concavity in the relationship between enrollment in private and religious schooling and the share of the religious group in the population we present empirical evidence from united states county data on catholic and private school enrollment that strongly supports our theory the paper contributes to a better understanding of the demand for religious education

cost versus control understanding ownership through outsourcing in hospitals for profit hospitals in california contract out services much more intensely than either private nonprofit or public hospitals to explain why we build a model in which the outsourcing decision is a trade off between cost and control since nonprofit firms are more restricted in how they consume net revenues they experience more rapidly diminishing value of a dollar saved and they are less attracted to a low cost but low control outsourcing opportunity than a for profit firm is this difference is exaggerated in services where the benefits of controlling the details of production are particularly important but minimized when a fixed cost shock raises the marginal value of a dollar of cost savings we test these predictions in a panel of california hospitals finding evidence for each and that the set of services that private non profits are particularly interested in controlling physician intensive services is very different from those than public hospitals are particularly interested in labor intensive services these results suggest that a model of public or nonprofit make or buy decisions should be more than a simple relabeling of a model derived in the for profit context

factors explaining local privatization a meta regression analysis this paper aims at explaining the differences in the results of empirical studies of motivations for local privatization by undertaking a meta regression our results suggest that fiscal constraints and interest groups were especially relevant in the early studies of the us which considered several services further studies that focus on one service capture the influence of scale economies more accurately finally our results show that small towns are more affected by fiscal and political factors while ideology plays a major role for european and large cities thus no clear conclusions emerge from this literature because the findings of each study are sensitive to its characteristics

why do different countries choose a different public private mix of educational services we observe a wide range across countries in the percentage of total enrollments that attend private rather than public schools this paper seeks to explain 1 the systematically higher proportion of private enrollments pvt in developing as compared with developed countries at the secondary level and 2 the seemingly random variation across countries within a given level of education and stage of development i argue that the latter is due to differentiated demand and nonprofit supply both of which stem from cultural heterogeneity especially religious heterogeneity in contrast the large pvt at the secondary level in developing countries is hypothesized to stem from limited public spending which creates an excess demand from people who would prefer to use the public schools but are involuntarily excluded and pushed into the private sector the limited public spending on secondary education in turn is modelled as a collective decision which is strongly influenced by the

why democracies produce efficient results by applying the standard tools of microeconomic analysis i argue that democratic markets work as well as economic markets in particular i show that previous work has greatly exaggerated the existence of principal agent and informational problems in electoral markets and has drawn incorrect conclusions

special tax regimes and the choice of organizational form evidence from the european tonnage taxes abstract tax systems often discriminate among the various organizational forms of doing business and may therefore affect the choice of organizational form this paper studies how special tax regimes shape the organizational form choice although the full effects depend on the way that firm level special tax regimes are designed special regimes generally tend to favor pass through firms over non pass through firms the tonnage tax a tax incentive for international shipping firms available in many countries worldwide is examined to understand these effects employing european firm and country level data the impact of the tonnage tax on organizational form choice is studied empirically the results are consistent with the theoretical model shipping firms are less likely to incorporate if the tonnage tax is also available for firms that have adopted pass through organizational forms

an empirical analysis of self employment in the u k the paper formulates a self employment paid employment choice problem that draws upon knight s notion that the individual responds to the risk adjusted relative earnings opportunities in each sector based on a development of such choice theoretic considerations an econometric model is developed with the purpose of empirically examining the determinants of self employment the model features simultaneous determination of employment status and earnings which allows for self selectivity the model is estimated using a sample of 4762 individuals from the general household survey for 1978 the estimation of the earnings equation enables a calculation of the self employment paid employment earnings differential and the estimated probit equation for self employment paid employment status facilitates the prediction of the probability of self employment the paper finds that there is positive selection bias in the observed earnings of employees that the probability of self employment depends positively on the earnings difference between the two sectors and that education and age are significant determinants of self employment

agent compensation and the limits of bonding agents in positions of trust may engage in malfeasance which is difficult to detect this paper develops a model in which employers seek to control malfeasance by paying wages contingent on imperfect monitoring and agents may be required to pay entry fees or post bonds we conclude that entry fees which exceed agents assets are ineffective in controlling malfeasance as a result conditions exist in which it is optimal to pay agents more than their opportunity cost such conditions lead to an excess supply of applicants and allow employers to engage in discrimination at zero cost to themselves

an empirical study of the consolidation of local public health services in connecticut this study contributes to the literature by empirically examining the decision of connecticut communities to consolidate the delivery of public health services as theory suggests the prospect of scale economies is found empirically to increase the likelihood that a community consolidates public health services in addition differences across communities are found to inhibit the consolidation of public health services overall the results imply that financial incentives may be necessary to encourage more regional districts because localities may underestimate the true minimum efficient scale for public health services and because heterogeneity among jurisdictions impedes regional cooperation

the role of market forces in assuring contractual performance the conditions under which transactors can use the market repeat purchase mechanism of contract enforcement are examined increased price is shown to be a means of assuring contractual performance a necessary and sufficient condition for performance is the existence of price sufficiently above salvageable production costs so that the nonperforming firm loses a discounted steam of rents on future sales which is greater than the wealth increase from nonperformance this will generally imply a market price greater than the perfectly competitive price and rationalize investments in firm specific assets advertising investments thereby become a positive indicator of likely performance

immigration redistribution and universal suffrage the effect of immigration on redistribution has been widely debated this paper contributes to this debate by testing two explanations which are that i immigration tends to reduce redistribution due to people s higher levels of xenophobia and that ii immigration affects redistribution because immigrants do not have the right to vote since the demand for redistribution depends on the expected gap between median voter income and mean income immigrants affect the demand for redistribution because as non citizens they do not change the median voter s income but as economic stakeholders they do affect the mean income four empirical consequences of i and ii are tested at the individual level evidence from the european values survey in 45 countries confirms ii showing that immigrants expected competitiveness on the labor market affects preferences for redistribution and that it is amplified when the perceived number of immigrants is high in contrast i is globally rejected since the impact of the citizens declared level of solidarity with immigrants tends to be weak and depends on the type of measurement or specification used

the effects of risk on self employment the effects of sectoral risk on the propensity to become self employed are analysed in contrast to previous studies which assume risk is concentrated only in the self employment sector a general equilibrium model is constructed in which uninsurable risk exists in both the paid and self employed sectors it is shown that when agents wish to mix self employment and employee participation the effects of sectoral risk on the optimal self employment decision is ambiguous this result disappears if agents choose instead to participate in one sector alone

gender differences in firm performance evidence from new ventures in the united states abstract prior studies examining the performance of female and male owned firms have generally reported that female owned firms underperform male owned firms however it is conceivable that the performance measures used by previous studies and or their inability to control for key demographic differences may have contributed to this finding for example few studies use size adjusted performance measures and yet we know that female owned firms tend to be smaller than their male counterparts similarly risk is typically not considered even though evidence suggests that women tend to be more risk averse than men we use a longitudinal five year database of more than 4000 new ventures that began operations in the u s in 2004 to determine whether potential differences in the performances of female and male owned firms disappear when appropriate performance measures are used and important demographic differences are controlled for in the models the performance measures we examine include 4 year closure rates return on assets roa and a risk adjusted measure sharpe ratio univariate test results confirm our expectation based on both liberal and social feminist theory that there is no difference in the performance of female and male owned new ventures provided performance is appropriately measured further these results are supported by our multivariate analyses which control for demographic differences such as industry experience and hours worked our findings should be of interest to researchers financiers advisors and policy makers perhaps more importantly our findings should also ensure that women who are contemplating starting a new venture are not discouraged from doing so by a false belief that new ventures initiated by women are less likely to succeed than those initiated by men

running in the family parental role models in entrepreneurship it is well established that children of self employed parents are more likely to become self employed themselves but the reasons are still hotly debated using danish register data we investigate the importance and workings of parental role models for the probability of becoming self employed we find that the effect of a self employed father mother is much higher for males females these results are statistically and economically very significant and they survive when we control for parental wealth and work experience from the parents firms and when we exclude cases where the offspring takes over the family business this points to a strong role for parental role models in explaining why self employment runs in the family

rich dad smart dad decomposing the intergenerational transmission of income we construct a simple model consistent with becker and tomes that decomposes the intergenerational income elasticity into the causal effect of financial resources the mechanistic transmission of human capital and the role that human capital plays in the determination of fathers permanent incomes we show how a particular set of instrumental variables could separately identify the money and human capital transmission effects using data from a 35 percent sample of swedish sons and their fathers we show that only a minority of the intergenerational income elasticity can be plausibly attributed to the causal effect of fathers financial resources

the impact of the corporate income tax evidence from state organizational form data abstract by taxing the income of corporate firms at a different rate than non corporate firms taxes can play an important role in a firm s choice of organizational form the sensitivity of the organizational form decision to tax rates provides a key indicator of the distortion created by the corporate income tax this paper uses new cross sectional data on organizational form choices across states compiled in the census of retail trade to estimate this sensitivity the results document a significant impact of the relative taxation of corporate to personal income on the share of real economic activity that is done by corporations and that the impact is many times larger than has been found in the previous empirical literature based on time series data the results show little impact however on the actual operations of firms such as their labor intensity wages and the like they do indicate that firms are able to exploit the progressivity of the corporate income tax system by dividing into numerous firms

are women more risk averse we find that single women exhibit relatively more risk aversion in financial decision making than single men using u s sample data we examine household holdings of risky assets to determine whether there are gender differences in financial risk taking as wealth increases the proportion of wealth held as risky assets is estimated to increase by a smaller amount for single women than for single men gender differences in financial risk taking are also influenced by age race and number of children greater financial risk aversion may provide an explanation for women s lower levels of wealth compared with men s jel j16 d81 g11

parents performance in entrepreneurship as a double edged sword for the intergenerational transmission of entrepreneurship we investigate how perceived parents performance in entrepreneurship ppe affects the entrepreneurial career intentions of offspring we argue that while perceived ppe enhances offspring s perceived entrepreneurial desirability and feasibility because of exposure mechanisms it inhibits the translation of both desirability and feasibility perceptions into entrepreneurial career intentions due to upward social comparison mechanisms thus perceived ppe acts as a double edged sword for the intergenerational transmission of entrepreneurship our predictions are tested and confirmed on a sample of 21 895 individuals from 33 countries this study advances the literature on intergenerational transmission of entrepreneurship by providing a foundation for understanding the social psychological conditions necessary for such transmission to occur

the roots of entrepreneurship and labour demand individual ability and low risk aversion the topic of entrepreneurship currently experiences a revived interest as is shown by the research agenda of today s empirical researchers there are few issues in economics which are backed up by such a rich historical knowledge base as is the case with entrepreneurship this paper aims to give an overview of some important classic contributions relating to today s and tomorrow s empirical research subjects the overview consists of answers to six research questions by six historical contributors to entrepreneurship research together these questions give some insight into the determinants of successful entrepreneurship the classic contributors considered are cantillon say marshall schumpeter knight and kirzner their views are compared to each other as well as to some recent results of empirical research into the determinants of successful entrepreneurship

entrepreneurial success and occupational inheritance among proprietors roughly 50 percent of self employed proprietors are second generation proprietors these individuals acquire informal business experience while growing up in the context of a family business since some of this informal experience substitutes for more formally acquired schooling measured rates of return to the latter will not be as high as for wage salary workers early acquisition of managerial human capital that can be acquired only through experience implies differentially greater proprietary success for second generation proprietors compared with first generation proprietors the authors present evidence in favor of both hypotheses

municipal government approaches to service delivery an analysis from a transactions cost perspective municipal governments are less likely to contract out for service delivery if citizen preferences for the service are heterogeneous this conclusion is based on an analysis that extends to the public sector the empirical industrial organization literature on transaction costs and the make or buy decision faced by private firms service delivery practices for sixty three municipal services are examined the findings are consistent with the proposition that the cost for writing and monitoring contracts may be an important consideration in municipal service delivery approach and that bureaucratic supply may not be as inefficient as some previous studies indicate

the effects of exposure to hyperinflation on occupational choice abstract we use data on immigrants who live in the united states to study the effects of exposure to hyperinflation on occupational choice to do so we calculate the number of years an individual had lived under hyperinflation before arriving to the us we find that its marginal effect on the probability of being self employed instead of wage earner is 0 87 percentage point this finding suggests that the macroeconomic environment one lives in permanently affects his economic behavior the estimated effect depends on the age individuals had when exposed to hyperinflation in particular it vanishes for those over the age of 40

intergenerational transmissions in immigrant self employment evidence from three generations this paper presents the first study of intergenerational transmissions in immigrant self employment across three generations based on a swedish data set the results show that having a self employed father as well as having a self employed grandfather has a positive effect on self employment propensities for male third generation immigrants for native swedes having a self employed father is of importance for self employment propensities while having a self employed grandfather is not evidently there appears to be a generational link in self employment across three generations for immigrants but not for natives since immigrants transfer general self employment abilities third generation immigrants with self employed ancestors are over represented in self employment many of them however are not necessarily in the same business line as their fathers in contrast when natives transfer general self employment abilities their offspring tend to become self employed in the same business line as their fathers

is entrepreneurship a route out of deprivation frankish j s roberts r g coad a and storey d j is entrepreneurship a route out of deprivation regional studies this paper investigates whether entrepreneurship constitutes a route out of deprivation for those living in deprived areas the measure of income wealth used is based on an analysis of improvements in an individual s residential address the data consist of information on over 800 000 individuals and come from the customer records of a major uk bank comparing business owners with non owners the results suggest that the benefits of business ownership are found across the wealth distribution hence entrepreneurship can be a route out of deprivation

how endogenous risk preferences and sample selection affect analysis of firm survival the roles of selection and endogeneity in measured risk preferences are illustrated using the correlation between risk attitudes and firm survival selection bias occurs when risk attitudes are elicited only from current entrepreneurs so that the risk attitudes of unsuccessful entrepreneurs are excluded from the analysis risk attitudes measured after agents enter entrepreneurship will endogenously reflect business success data on entrepreneurs from the national longitudinal survey of youth 1979 and the panel study of income dynamics shows that when risk attitudes are measured subject to selection and endogeneity mixed or even positive correlations between risk acceptance and the probability of firm exit occur however firm exits fall monotonically with willingness to accept risk when risk preference measures are not subject to selection or endogeneity related to business success

the effect of early entrepreneurship education evidence from a field experiment the aim of this study is to analyze the effectiveness of early entrepreneurship education to this end we conduct a randomized field experiment to evaluate a leading entrepreneurship education program that is taught worldwide in the final grade of primary school we focus on pupils development of entrepreneurship knowledge and a set of non cognitive skills relevant for entrepreneurial activity the results indicate that knowledge is unaffected by the program however the program has a robust positive effect on non cognitive entrepreneurial skills this is surprising since previous evaluations found zero or negative effects because these earlier studies all pertain to entrepreneurship education for adolescents our result tentatively suggests that non cognitive entrepreneurial skills are best developed at an early age as the entrepreneurship program has various features besides its entrepreneurship content we must leave it to future research to determine which specific element has the greatest impact on the development of non cognitive entrepreneurial skills

business ownership and attitudes towards risk we explore the relationship between business ownership and attitudes towards financial risk using individual level data drawn from the us survey of consumer finances scf the scf includes a measure of individuals attitudes towards risk allowing us to explore the implications of interpersonal differences in risk attitudes for the probability and success of business ownership our empirical findings suggest that willingness to take financial risk is positively associated with both the incidence and success of business ownership we find that this relationship is particularly pronounced in cases where the individual actually started the business

does racial prejudice affect black entrepreneurship evidence exploiting spatial differences in prejudicial attitudes abstractthis article explores the relationship between racial prejudice towards blacks and the black white self employment rate gap and provides the first direct empirical evidence that racial prejudice negatively impacts black self employment particularly in high start up cost industries to perform this analysis i construct a measure of prejudicial attitudes using responses from the general social survey and estimate the relationship between self employment and this index using the american community survey i find that an amount of prejudice equal to the difference in least and most prejudiced census divisions increases the black white self employment rate gap in high start up cost industries by 10 4 16 8 depending upon whether parental self employment is controlled for and represents the entire impact of racial prejudice on the black white self employment rate gap additionally racial prejudice widens the black white self employment income gap by between 6 4 and 8 2 in my full specification d

make buy or ally a transaction cost theory meta analysis since the publication of williamson s markets and hierarchies many empirical articles have investigated the tenets of transaction cost theory using meta analytic techniques we quantitatively syn

on the origins of entrepreneurship evidence from sibling correlations we assess the broad importance of family and community background for entrepreneurship outcomes we go beyond traditional intergenerational associations by estimating sibling correlations in unincorporated and incorporated entrepreneurship using register data from sweden sibling correlations range from 20 to 50 they are consistently higher for more committed and incorporated entrepreneurship than for less committed or unincorporated entrepreneurship they are also higher for brothers than sisters we then assess what factors drive these correlations parental entrepreneurship neighborhoods shared genes and financial resources help explain these high correlations whereas immigration status family structure and sibling peer effects have a limited contribution the higher correlation for incorporated versus unincorporated entrepreneurship is explained mainly by the type of parental entrepreneurial engagement and financial resources while the gap between brother and sister correlations in unincorporated entrepreneurship is largely driven by the geographic concentration of male dominated industries

regulation capital and the evolution of organizational form in us life insurance this paper studies the association between regulation and the organizational form of new life insurers between 1900 and 1949 the mutual form was popular in states with low initial capital requirements for mutual companies and differentially higher requirements for stock companies but was rarely used elsewhere this suggests that entrepreneurs took a path of least resistance when choosing organizational form and that the mutual s disadvantage in raising capital contributed to its decline a decline that accelerated as states raised requirements and eliminated the aforementioned differentials contrary to previous analysis the paper finds little evidence connecting other regulations to mutual decline jel g21 l51 n21 n22

housing assets and consumer spending a regional analysis carruth a and henley a 1993 housing assets and consumer spending a regional analysis reg studies 27 611 621 this paper is concerned with the relationship between the housing market and consumer spending for the eleven standard regions of the uk pooled regional cross sectional and annual time series data are used to appraise the effect of housing assets on regional consumer spending in the 1980s a fixed effects estimator imposing common slope coefficients across the regions is employed and this assumption is tested using the sure estimator estimates of a dhsy specification of the consumption function and a model augmented with housing assets are compared the fixed effects models perform quite well indicating that the growth in regional housing equity has had a positive impact on regional consumer spending the sure results indicate that the assumption of common regional responses of consumer spending to the explanatory variables is not valid and that the housing wealth effect is strongest in

taxes organizational form and the deadweight loss of the corporate income tax abstract by changing the relative gain to incorporation corporate taxation can play an important role in a firm s choice of organizational form general equilibrium models have shown that substantial shifting of organizational form in response to tax rates implies a large deadweight loss of taxation this paper estimates the impact of taxes on organizational form using data from 1900 1939 the results indicate that the effect of taxes is significant but small a corporate rate increase of 0 10 raises the non corporate share of capital 0 002 0 03 the implied deadweight loss of the corporate income tax is around 5 10 of revenue

the rise in self employment amongst u k males this paper uses time series data to attempt to identify the factors responsible for the rise in self employment amongst uk males focusing in particular on the period of rapid growth which was experienced during the 1980s the empirical results suggest that the most significant long run influence on the growth of self employment has been the rise in the real value of personal sector liquid wealth though rising levels of gdp and to a lesser extent increases in the real value of housing wealth have also made a significant contribution there is tentative support for the notion that mrs thatcher may have succeeded in ushering in an entrepreneurial renaissance within the uk economy though the evidence for this is rather crude there is no evidence for the view that recession push effects have been significant in accounting for the rise in self employment

self employment and labor force participation of older males this longitudinal analysis of the labor market behavior of older urban white males in 1969 1971 and 1973 focuses on changes from wage and salary to self employment and changes from working to nonworking status in each two year transition approximately 4 percent of wage and salary workers switched to self employment controlling for a large number of economic and demographic variables the self employed were significantly more likely to continue to work partly by reducing their workweek to under 35 hours other significant predictors of continuing to work are good health years of schooling white collar occupation no expectation of a private pension and a workweek longer than 50 hours age is also important especially at the eligibility ages set by social security

the impact of entrepreneurship education on entrepreneurship skills and motivation this paper analyzes the impact of a leading entrepreneurship education program on college students entrepreneurship skills and motivation using an instrumental variables approach in a difference in differences framework we exploit that the program was offered to students at one location of a school but not at another location of the same school location choice and thereby treatment is instrumented by the relative distance of locations to parents place of residence the results show that the program does not have the intended effects the effect on students self assessed entrepreneurial skills is insignificant and the effect on the intention to become an entrepreneur is even negative

hierarchies and entrepreneurship we establish a correlation between the hierarchical structure of a firm and the likelihood of business creation among its former employees using a sample of 16 million observations of swedish workers and a novel proxy for hierarchies based on occupation data conditional on firm size and many other variables employees in firms with more layers are less likely to enter entrepreneurship to become self employed and to switch to another employer the effects of layers are much stronger for business creation than for job switching and they are stronger for entrepreneurship than for self employment we discuss two potential explanations for the distinctive hierarchy effect we find part of the effect could be to be due to preference sorting by employees and part due to employees in firms with fewer layers having a broader range of skills one test showing that the probability of entrepreneurship increases with their prior rank in an organization is consistent with ability sorting and inconsistent with preference sorting

the economics of schooling production and efficiency in public schools n recent years public and professional interest in schools has been heightened by a spate of reports many of them critical of current school policy these policy documents have added to persistent and long standing concerns about the cost effectiveness and fairness of the current school structure and have made schooling once again a serious public issue as in the past however any renewed interest in education is likely to be short lived doomed to dissipate as frustration over the inability of policy to improve school practice sets in this frustration about school policy relates directly to knowledge about the educational production process and in turn to underlying research on schools although the educational process has been extensively researched clear policy prescriptions flowing from this research have been difficult to derive 2 there exists however a consistency to the research findings that does have an immediate application to school policy schools differ dramatically in quality

are changes of organizational form costly income shifting and business entry responses to taxes abstract drawing on administrative panel data covering the full population of business owners in the uk i study the effects of differential tax liabilities across organizational forms on business entry and on income shifting i find that a 10 increase in savings from incorporation leads to a 1 7 increase in the number of new business owners however higher entrepreneurial entry is offset by income shifting increasing the hazard rate of incorporation of the existing self employed by up to 2 3 for a 10 increase in tax savings i show that despite large tax savings from incorporation exceeding 10 pp in some years a substantial proportion of business owners fail to incorporate suggesting that income shifting through incorporation is not the primary avoidance channel for the self employed

who become serial and portfolio entrepreneurs serial entrepreneurs run multiple businesses in sequence while portfolio entrepreneurs run multiple businesses in parallel they differ from novice entrepreneurs who have so far operated only one venture the present paper is the first to model occupational choices between all three entrepreneurial types it goes on to discuss its theoretical predictions in the light of independent evidence about serial and portfolio entrepreneurship from the extant literature

entrepreneurship and the intergenerational transmission of values there is mounting empirical evidence that there is intergenerational transmission of parental preferences for entrepreneurship however much of the work on this topic is not explicit about the role of values in this transmission process furthermore nearly all studies neglect potential heterogeneity of values among entrepreneurial parents this paper contributes to the literature by making use of a natural experiment that allows 1 identifying a group of entrepreneurial parents who have a distinct priority of challenging existing conditions mastery and 2 detecting whether this value orientation is transmitted comparing german entrepreneurs two decades after reunification reveals that the children of self employed parents who encountered a great deal of resistance in the socialist german democratic republic due to their self employment are much more likely to give mastery as the reason for running their own venture compared to entrepreneurs whose parents did not have to overcome this sort of challenge

regional unemployment self employment and family background this paper analyses the role of regional unemployment on self employment the paper argues that family background separates individuals with respect to the effect of unemployment the empirical analysis is based on data on a sample of finnish residents aged 0 14 years in 1970 whose subsequent employment is examined the results show that high unemployment in a region pushes individuals from self employed families into self employment while it has the opposite effect on individuals from wage earner families the push effect seems to work only among those individuals who already have entrepreneurial skills through their family background

family background and income during the rise of the welfare state brother correlations in income for swedish men born 1932 1968 we investigate if the association between family background and income in sweden has changed for men born between 1932 and 1968 our main finding is that the share of the variance in long run income that is attributable to family background the so called brother correlation in income has fallen by some 17 from 0 49 for the cohorts of brothers born in the early 1930s to below 0 32 for the cohorts born around 1950 from then on the correlations have inched back up to around 0 37 we report suggestive evidence that the decline is driven by changes in education

the predicted earnings differential and immigrant self employment in sweden this paper investigates the influence of the predicted earnings differential between self employment and wage employment on self employment propensities among immigrants in sweden immigrants from non european countries have essentially lower earnings from self employment and wage employment than immigrants from european countries it is found that the difference between an immigrant s predicted earnings in self and wage employment has a strong influence on an immigrant s self employment decision a one unit increase in the log differential between self employment and wage employment earnings increase the self employment rate among immigrants by about 5 percentage points suggesting that discriminatory wages in the wage employment sector may push immigrants towards self employment

ethnic enclaves and the economic success of immigrants evidence from a natural experiment recent immigrants tend to locate in ethnic enclaves within metropolitan areas the economic consequence of living in such enclaves is still an unresolved issue we use an immigrant policy initiative in sweden when government authorities distributed refugee immigrants across locales in a way that may be considered exogenous this policy initiative provides a unique natural experiment which allows us to estimate the causal effect on labor market outcomes of living in enclaves we find substantive evidence of sorting across locations when sorting is taken into account living in enclaves improves labor market outcomes for instance the earnings gain associated with a standard deviation increase in ethnic concentration is in the order of four to five percent

to segregate or to integrate education politics and democracy how is the quality of public education affected by the presence of private schools for the rich theory and evidence suggest that the link depends crucially on the political system we develop a theory that integrates private education and fertility decisions with voting on public schooling expenditures we find that the presence of a large private education sector benefits public schools in a broad based democracy where politicians are responsive to low income families but crowds out public education spending in a society that is politically dominated by the rich the main predictions of the theory are consistent with state level data and micro data from the u s as well as cross country evidence from the programme for international student assessment study

an explanation for public provision of schooling the importance of indoctrination this article was completed while i was a national fellow at the hoover institution and represents the unpublished theory and cross country empirical sections from my 1984 university of california los angeles dissertation armen alchian harold demsetz gertrud fremling david friedman robert hansen ben klein ed lazear russell roberts finis welch e g west an unusually helpful anonymous referee from this journal and the participants in seminars at auburn university the university of california at los angeles and at davis california state university at hayward and northridge the hoover institution george mason university the university of houston southern methodist university the u s department of education texas a m university and the 1987 public choice meetings in tucson arizona provided valuable discussions i would like to thank maury pearl for very helpful research assistance any remaining errors are of course my responsibility

favorite sons intergenerational wealth transfers among politicians in this paper we investigate the degree of occupational following in politics and its impact upon the career success and behavior while in office of both sons and fathers we find that sons follow into their politician fathers footsteps to a degree surpassed in the general population only among farmers and self employed proprietors there is substantial indirect evidence which suggests that following is motivated to a large extent by the transfer of valuable name recognition and voter loyalty

economic incentives under contract supply of local government services it has been argued that organizations which are unable to directly appropriate any of the firm s residual earnings tend to experience various forms of wealth taking by managers alchian and kessel 1962 this wealth taking has been observed in privately owned regulated firms nelson 1980 as well as in government operated bureaus the results in this paper suggest that the x inefficiency associated with various forms of wealth taking may be constrained when external competitive pressures exist niskanen argued that one strategy for reducing the inefficiency associated with monopoly bureaus would be to set up two bureaus to compete for the sponsor s budget in order to generate better information on cost and production functions at the local level the lakewood plan by generating information on actual production cost to purchasing cities and to unincorporated area residents appears to create the desired effect by generating this flow of information on cost the lakewood plan eases the task of monitoring the performance of county departments second the threat of entry posed by the city bureau which can always produce services in house appears to effectively constrain the x inefficiency of the county supplier bureaus

influences on sponsorship deals in nascar indirect evidence from time on camera when corporate sponsors want to maximize their exposure they often focus sponsorship dollars on events teams and athletes that will prove to be reliable respectable and most important repetitive advertising outlets analysing the factors that increase a broadcaster s propensity to display a sponsor during television broadcasts is often hard to measure using a unique data set describing nascar broadcasts we indirectly analyse what influences the value of a sponsorship contract through a proxy for driver sponsorship value the value of time on camera vtoc we find that the vtoc is influenced by driver performance and their celebrity status as measured by driver experience and inherited brand name capital although the values of individual sponsorship contracts are generally not reported the evidence herein suggests that driver performance and status likely influence the value of nascar sponsorship contracts

the family inheritance and the intergenerational transmission of inequality unequal inheritance of material wealth is commonly considered a major cause of inequality in consumption however theoretical models of the intergenerational transmission of inequality by becker blinder and ishikawa imply that unequal inheritance may either increase or reduce consumption inequality differences in inherited wealth resulting from unequal parental incomes increase inequality in recipients consumption however unequal bequests caused by differences among families in the endowed ability of children or the costs of producing human capital are equalizing empirical results confirm these predictions the inheritance received by children is inversely related to both children s income and parental education thus bequests are compensatory in that ceteris paribus low income children inherit more than their advantaged contemporaries

an empirical analysis of risk aversion and income growth risk aversion enters many theoretical models of human capital investment but attitudes toward risk have not been incorporated in empirical models of human capital investment this article develops a model of the joint investment in financial wealth and human wealth to show that human capital investment is an inverse function of the degree of relative risk aversion using data from the survey of consumer finances i find that wage growth is positively correlated with preferences for risk taking more educated individuals are also more likely to be risk takers thus risk taking explains a portion of the returns to education

taxes financial decisions and organizational form evidence from publicly traded partnerships abstract publicly traded partnerships ptps also known as master limited partnerships are similar to u s corporations yet they are not subject to corporate taxes given their mixture of corporate and partnership characteristics ptps provide an experiment for studying taxation and firm financial decisions this paper compares the financial structure and dividend policies of ptps and corporations in the oil and gas exploration industry the results are consistent with hypotheses about taxes and financial decisions controlling for other factors ptps pay more dividends and borrow less than similar corporations

how much do taxes discourage incorporation the double taxation of corporate income should discourage firms from incorporating we investigate the extent to which the aggregate allocation of assets and taxable income in the united states between corporate and noncorporate firms responds to the size of this tax distortion during the period 1959 1986 in theory profitable firms should shift out of the corporate sector when the tax distortion is large and conversely for firms with tax losses our empirical results provide strong support for these forecasts and imply that the resulting excess burden equals 16 percent of business tax revenue one of the most basic distortions created by the double taxation of corporate income in the united states is the disincentive to incorporate even in most countries with integrated or partially integrated tax systems there are differential taxes across organizational forms however obvious this distortion may be most articles investigating the distortions created by the corporate tax have taken as exogenous a firm s choice whether or not to incorporate assuming for example that some industries are inherently corporate while others are inherently noncorporate a variety of nontax factors described below can certainly influence a firm s choice of organizational form causing some to favor incorporating and others not but are these nontax factors so dominant that taxes do not in practice influence a firm s choice of organizational form as gravelle and kotlikoff 1989 1993 emphasize tax induced changes in firms choices of organizational form in principle can create large excess burdens the size of these excess burdens in practice depends on the extent to which firms respond to these tax incentives in this article we calculate how the tax distortion discouraging firms from incorporating has varied over time then estimate the extent to which the allocation of assets and taxable income between corporate and noncorporate

human capital social capital and public schooling abstract public education contributes to growth not only by building human capital but also by instilling common norms that increase social cohesion this is modeled in the context of a political economy framework in which social cohesion reduces wasteful rent seeking and thus strengthens incentives for investment in human captial the political decisions that determine whether different social groups retain separate schooling systems or adopt an integrated system weigh these material advantages against the psychic cost to parents of alienating their children from traditional values this aspect of public education helps explain why commonly education is publicly administered as well as publicly financed

production costs transaction costs and local government contractor choice i introduction declining fiscal conditions increasing service obligations and public clamor for more effective government have led local governments to examine alternatives to the bureaucratic supply of publicly provided services the alternative which has received the most attention is contracting under this arrangement services are financed by the local government but production of the service is contracted to external suppliers a growing body of work has explored the contracting decision 1 focusing on the production choice does a local government providing i e financing a service produce it internally or externally the contracting decision however has a second part the contractor choice given the decision to externally produce a service does the local government contract with other governments with nonprofit organizations or with for profit firms 2 contracting is expected to yield production cost savings by exploiting scale economies overcoming input rigidities and capitalizing on managerial and competition induced efficiency incentives the extent to which these production cost savings are achieved depends on the sector of the external producer at the same time public accountability requires contracting governments to be concerned with the proper execution of the contracting process to ensure that shirking is minimized the transaction costs generated by this oversight also vary by the sector of the contractor thus the cost of service delivery depends on the sector of the external producer understanding the contractor choice from among the three sectors would add insight into the motivations for contracting and ultimately enable us to more correctly predict the cost and service quality effects of different external supply alternatives this paper explores the determinants of local government contractor choice in the next section we examine the production and transaction costs associated with organizations from the public nonprofit and for profit sectors we then develop a general model of the contractor choice and empirically test it using data on local government contract arrangements for three health services hospital drug and alcohol prevention and treatment and mental health ii service delivery costs and contractor options we posit that a local government in selecting the sector with which to contract seeks to maximize its utility by choosing the alternative that minimizes the costs of service delivery there are two components of service delivery costs production costs and transaction costs 3 production costs contracting is viewed as a means to overcome scale diseconomies perverse managerial incentives and input rigidities which generate a production cost premium for internal production external production separates the production scale decision from jurisdictional size thus allowing scale economies to be realized this benefit is provided by external production with any contractor of the appropriate size and thus scale economies should not in theory affect the sector choice however the extent to which the contractor exhibits managerial incentives and input flexibility which contribute to production cost savings depends on its organizational form managerial incentives the efficiency incentives of managers vary by the form of their organization in public bureaus principal agent problems arise from the informational advantages of the agents bureaucrats over their principals mayor council which are perceived to increase public production costs for example niskanen s 1971 notion of public bureaucrats as budget maximizers is predicated on the bureau s knowledge of the actual cost of delivering services and the use of this knowledge to increase their budgets in addition the lack of property rights to residuals the difference between budgets and actual production costs reduces incentives for bureaucrats to minimize costs

transition to entrepreneurship from the public sector predispositional and contextual effects studies of career dynamics implicitly claim that government employees are not entrepreneurial utilizing longitudinal data from the u s panel study for income dynamics we investigate the reasons for the low rate of entrepreneurship from the public sector we conjecture that it is due to labor market matching processes and the bureaucratic nature of public organizations and bureaucratization of individuals our life course analysis identifies labor market matching as a major determinant nonentrepreneurial types choose public sector employment we also uncover tenure and context effects which decrease and increase the hazard rate of entrepreneurial exit respectively whereas the former effect points toward adaptation and internal labor market sorting the latter draws attention to exits due to frustration

self employment in the uk regions the significant regional variations which exist in the rate of self employment among uk males are highlighted and attempts made to explain them using pooled crosssection time series data for the period 1973 93 it is found that in the long run regional rates of self employmentare a function of the real value of net housing wealth and the industry composition of regional gdp however a significant proportion of regional variations in self employment can only be explained by regional fixed effects which reflect fundamental long term influences which make some regions more fertile environments for self employment than others

spillovers in education choice abstract this paper examines how skills are shaped by social interactions in families we show that older siblings causally affect younger sibling s educational choices and early career earnings we focus on critical course choices in high school and overcome the identification challenges of estimating spillover effects in education by exploiting exogenous variation in choice sets stemming from a pilot program the pilot induced an essentially random subset of older siblings to choose advanced math science at a lower cost while not directly affecting the course choices of younger siblings we find that younger siblings are 2 3 percentage points more likely to choose math science if their older sibling unexpectedly could choose math science at a lower cost we argue that the main influence of the pilot program on the younger siblings may be attributed to the social influence of the older sibling spillovers are strongest among closely spaced siblings in particular brothers and they have a lasting impact on the career outcomes of younger brothers we argue that competition is likely one of the driving forces behind younger siblings conforming to their older siblings choices

experimentation and the returns to entrepreneurship previous studies have argued that entrepreneurs earn less and bear more risk than salaried workers with otherwise similar characteristics in a simple model of entrepreneurship i show that estimates of mean and variance of returns to entrepreneurship used by these previous studies are biased as they fail to account for the option value of experimenting with new ideas using longitudinal data i find patterns that are consistent with entrepreneurship as experimentation and returns to entrepreneurship that are more attractive than established by previous research