Working Paper No. 970

Experience and Entrepreneurship: A Career Transition Perspective

Published: August 6, 2013, revised December 2013, September 2018 and February 2019Pages: 57Keywords: Entrepreneurship; Employee mobility; ExperienceJEL-codes: L26; D20; J20; M50
Published version

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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joacim.tag@ifn.se

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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