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On the nature of micro-entrepreneurship: evidence from Argentina

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We analyse the nature of micro-entrepreneurship in Argentina. We focus on whether the sector resembles its counterpart in industrialized countries, characterized by the risk-taking nature of the entrepreneurial activity, or if it is the result of labour market distortions and disguised unemployment, as in the dual economy hypothesis. Our results suggest a segmentation of the micro-entrepreneur sector. Both young uneducated and middle aged highly educated salaried workers have the highest likelihood of becoming entrepreneurs. However, the first segment has a high probability of becoming own-account workers, while the probability of becoming micro-entrepreneurs with employees is strictly increasing in both age and education. Moreover, the probability of entrepreneur failure (as measured by the transition to the salaried sector) has an inverted U shape, implying that both high and low skill individuals are more likely to remain entrepreneurs.

Document Type: Research Article


Affiliations: 1: Department of Economics, University of Illinois at Urbana-Champaign, Champaign, IL 61820, USA 2: Department of Economics, University of California, San Diego, CA 92093, USA

Publication date: September 1, 2009

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