| The theory of income (occupational) choice is a well-known framework for studying self-employment decisions. In this context the roles of entrepreneurial abilities, risk attitudes and liquidity constraints as well as many other covariates have been investigated widely. This approach has two major shortcomings. A first is that the self-employment decision is static: one chooses between self-employment and paid employment. In reality there is a process in which people move through various engagement levels from never thinking about the self-employment option, to thinking about it, to taking steps (nascent entrepreneurship), to having a young business, to having a mature business, and possibly dropping out. Each stage is assumed to have specific determining factors. The Flash Eurobarometer dataset for 2007 of the European Commission contains more than 20,000 individual observations for all European Union member countries and the United States. It allows a full study of all engagement levels. Covariates include demographic, perception and preference variables as well as country-specific effects. This enables an entirely new multilevel set-up of the explanation of entrepreneurial engagement levels. A second shortcoming is that no discrimination is made between intentions and reality of the self-employment decision and their specific determinants. Eurobarometer data allow a full study of the interplay between intentions and reality, i.e. latent and real entrepreneurship. |
