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The Imprint of Labor Markets on Entrepreneurial Performance

Date & Time:
February 1, 2017 | 1:00 pm - 2:00 pm
SS 921
Seok-Woo Kwon is Associate Professor at the Haskayne School of Business

Using the 1979-2010 waves of the National Longitudinal Survey of Youth, our study tracks the earnings of individual entrepreneurs from the beginning of their entrepreneurial careers, examining the effects of labor markets on their earnings trajectory. Results show that unfavorable labor markets pull in individuals who are otherwise ill-prepared to start their own businesses, in terms of human capital and work experience. Apart from such self-selection, these labor markets also impose a penalty on the initial earnings of entrepreneurs who start a business in adverse economic conditions, a disadvantage that widens when they persist in entrepreneurial activity. We also identify two factors expected to alleviate the imprinting effect of labor markets: multiple instances of entrepreneurship and shorter periods of exposure to the imprinting environment. None of these factors make the effect of initial labor markets disappear. The findings suggest an imprinting effect of entering entrepreneurship in an economically deprived context that lingers over time.