A dynamic mechanism on employed worker’sjob career choice path: Becoming an entrepreneurs vs. maintaining an employed status

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Abstract

The paper develops an infinitely repeated game-theoretic model in order to scrutinize the entrepreneurial career path transition of employed workers. First, employed workers, trying to avoid entrepreneurial risks, have a conservative attitude on entrepreneurship generically. Second, even if the degree of individual specific technology or know-how is high enough, the likelihood of employed worker’s career path transition can be decreased interacting with individual-wise risk aversion. Third, it is demonstrated if employed workers are more likely to transit to entrepreneurial career path as the younger the employed workers are or the higher the gains from entrepreneurship are expected. The predictions of the model are empirically tested using a cross-country panel data collected from Global Entrepreneurship Monitor. Main empirical findings support the theoretic predictions. As long as it is socially more efficient to transit those employed workers to entrepreneurs rather than incubating nascent entrepreneurs, a government needs to put a more emphasis on enlightening entrepreneurial courage rather than encouraging innovations or technologies to novice entrepreneurs, which is, to the least, a way to decrease society-wise opportunity costs. This implicit effect needs to be more importantly considered than casually quoted the direct effect of entrepreneurship, i.e. job creation effect.

Original languageEnglish
Pages (from-to)247-260
Number of pages14
JournalEconomic Computation and Economic Cybernetics Studies and Research
Volume52
Issue number1
DOIs
StatePublished - 2018

Keywords

  • Career path
  • Education
  • Entrepreneurship
  • Repeated game
  • Risk aversion
  • Sustainability

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