Financial development, entrepreneurship and job satisfaction

Pre-print, Working paper: This paper shows that utility differences between the self-employed and the employees increase with financial development. This effect is not explained by increased profits but by an increased value of non- monetary benefits, in particular job independence. We interpret these findings by building a simple occupational choice model in which financial constraints may impede firms' creation and depress labor demand, thereby pushing some individuals into self-employment for lack of salaried jobs. In this setting, financial development favors a better matching between individual motivation and occupation, thereby increasing entrepreneurial utility despite increasing competition and so reducing profits.

Author(s)

Milo Bianchi

Date of publication
  • 2008
Keywords JEL
G20 J20 L26
Keywords
  • Financial development
  • Entrepreneurship
  • Job satisfaction
Internal reference
  • PSE Working Papers n°2008-59
Version
  • 1