Talent workers as entrepreneurs

Talent workers as entrepreneurs: a new approach to aspirational self-employment

Talent workers as entrepreneurs:a new approach to aspirational self-employment

Magdalena Smyk

University College London

24 June 2015


Research shortcut

Research key points

Questions:Do flows from employment to self-employment tend to attractindividuals with higher potential to innovate?

Method:Model of choosing self-employment with special focus ontalent workers. Looking at stocks - mainly secondaryeducated; but we look at flows (skill-biased technologicalchange requires new skills).

Data:Panel - Polish Labour Force Survey 2001-2013

Result:Talent workers are more likely to enter self-employment andcreate new work places.


Research shortcut

Research key points






Research shortcut

Research key points






Research shortcut

Research key points






Motivation

Motivation

Entrepreneurship (Wennekers and Thurik 1999, Van Stel et al.2005, Carree and Thurik 2010):

job creation,productivity growth,development and commercialization of increasing quality andvariety products

Two types of entrepreneurship - aspirational andnecessity-driven (Naude 2010, Estrin et al. 2013)


Motivation

Does Polish entrepreneurship have a chance to besuccessful?

Source: EUROSTAT LFS and GEM


Motivation

How to recognize ”high potential to innovate”?

Definition of talent worker by Hsieh et al. 2013:

at least tertiary education

one of the three top ISCO level occupation:

legislators, senior officials and managers;professionals;technicians and associate professionals


Method

Method

Two identification strategies:

Identification 1: probability of switching from WE to SE(SE=1) or change job within WE (SE=0)

P(SE = 1|tenure < 13 months) (1)

Identification 2: probability of switching from WE to SE(SE=1) or change industry within WE (SE=0)

P(SE = 1|change industry within a year) (2)


Method

Identification strategies

I 1 : P(SE = 1|tenure < 13 months) = α + β talent + γ x + δ z + ε(3)

I 1 : P(SE = 1|tenure < 13 months) = α + β talent + γ x + δ z + ε(4)


Method

Additional factors: mobility and productivity

Mobility - sector level indicators z

Based on claimed changes:

High mobility sectori ,t = 1 ifgross flowi ,t > average gross flowt

Mobility surplusi ,t = gross flowi ,t − average gross flowt

Based on claimed employment:

Downsizing in employment = 1 if# of workersi ,t−1 > # of workersi ,t

Income - proxy of productivity x


Method

Additional factors: mobility and productivity

Mobility - sector level indicators z

Income - proxy of productivity x

Lack of SE income in LFS, so...

We calculated fitted values and residuals based on simpleMincerian regression

Income percentile in broader groups in respect to age, gender,residence and education levelAveraged residual in the groupOverpaid group = # of positive residualsk−# of negative residualsk

# of group membersk


Data

Polish Labour Force Survey - 2001-2013

LMS individuals women men talent workers

WE 298 129 141 771 156 358 65 257SE 39 810 12 994 26 816 8 507U 65 310 31 794 33 516 -I 303 917 177 536 126 381 -

WE - SE 1 534 490 1 044 381

WE - WE (id1) 21 953 8 132 13 821 3 298WE - WE (id2) 8 182 3 125 5 057 381


Data

Talent workers and tertiary educated


Results

Talent workers drives self-employment entry

ID1 ID2

Talent worker 0.05*** 0.09***Female*talent -0.01 -0.03*

Married 0.02*** 0.05***Age 0.01*** 0.02***

Age2 -0.01*** -0.03***Female -0.02*** -0.03***

Medium size city 0.01** 0.02**Large city 0.01*** 0.03***

Year and quarter dummies INCLUDED INCLUDEDIndustry categories INCLUDED NOT INCLUDED

Observations 23,383 9,716


Results


Talent worker 0.04*** 0.04*** 0.05*** 0.05*** 0.05*** 0.05***Female*talent -0.01 0 -0.01 0 0 0

high mobility 0.02***sector

mobility surplus 1.27***downsizing 0

employmentincome 0

percentileaverage residual 0.12***overpaid group 0.01**

Observations 23,383 23,383 23,383 23,383 23,383 23,383


Results


Talent worker 0.10*** 0.10*** 0.09*** 0.10*** 0.11*** 0.12***Female*talent -0.03** -0.02 -0.03* -0.03* -0.02 -0.02

high mobility 0.11***sector

mobility surplus 3.93***downsizing 0.01

employmentincome 0

percentileaverage residual 0.38***overpaid group 0.05***

Observations 9,660 9,660 9,660 9,716 9,716 9,716


Results

Talent workers are more likely to become employers

Do talent workers more likely to employ? Total sample of SE

Creating jobs Creating jobs

Talent worker 0.28*** 0.03***Occupation NO YES

Age NO YESAge2 NO YES

Female NO YESResidence NO YES

Married NO YESYear and quarter YES YES

Observations 82,623 82,623


Conclusions

Conclusions

1 Talent workers are more likely to establish new firm thanother switchers

2 We control for industry specific mobility, job destruction,relative incomes or relative productivity of the worker.

3 Finally, talent workers are more likely to create new jobs.


Conclusions

Thank you!


Conclusions

Appendix. Fields of study - results

socialSTEM humanities sciences services health

Talent worker 0.06*** -0.01 0.01 -0.01 0.11*Female*talent -0.01 0.01 0.04* 0.08 -0.04

Observations 8,715 1,006 3,127 1,927 546

socialSTEM humanities sciences services health

Talent worker 0.13*** 0.01 0.03 -0.04 0.67***Female*talent -0.04 0.02 0.04 0.13 -0.21***

Observations 3,392 444 1,555 767 176

Economy & Finance

Talent workers as entrepreneurs