Individual entrepreneurial exit and earnings in subsequent paid employment

Abstract

We study earnings of individuals who exit entrepreneurship for paid employment. We find mean (median) positive rewards from entrepreneurship in subsequent paid employment relative to matched employees. Rewards are higher for former entrepreneurs hired in highly innovative sectors. We also find that the performance of the exited firm is a strong predictor of the earnings premium for former entrepreneurs when the firm performed well, while we do not find median discounts for entrepreneurs exiting low performing firms. We use registry data that encompass the population of firms and individuals in the Norwegian economy.