Working Paper No. 970

Experience and Entrepreneurship: A Career Transition Perspective

Published: August 6, 2013, revised December 2013 and September 2018Pages: 58Keywords: Entrepreneurship; Employee mobility; ExperienceJEL-codes: L26; D20; J20; M50

Experience and Entrepreneurship: A Career Transition Perspective Christopher I. Rider, Peter Thompson, Aleksandra Kacperczyk and Joacim Tåg


We cast entrepreneurship as one of three career choices – remaining with one’s employer, changing employers, or engaging in entrepreneurship – and theorize how the likelihood of entrepreneurship evolves over one’s career. We empirically demonstrate an inverted U-shaped relationship between
accumulated experience and entrepreneurship across various industries and jobs.

Despite detailed career history data and job displacement shocks that eliminate the current employer choice, we highlight the difficulty of inferring the mechanism underlying the observed relationship. These analyses motivate a formal career transitions model in which employer-specific and general skills accumulate with experience but potential employers observe only total skill.

The upshot of our model is that entrepreneurial career transitions vary with two relative costs: (1) to an individual of forming a business and (2) to a potential employer of utilizing the individual’s employer-specific skills. We discuss how this model contributes new insights into entrepreneurial careers.​

 

Joacim Tåg

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Ph: +46 8 665 4524
joacim.tag@ifn.se

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Martin Ljunge, IFN, is the author of a chapter, "Trust promotes health: addressing reverse causality by studying children of immigrants", in a new book edited by Sherman Folland and Eric Nauenberg. The cutting edge of research is presented, covering the ever-expanding social capital field.

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