Who Earns more : Job Creators, Solo-Entrepreneurs or Employees? Empirical evidence from Visegrad Countries

Entrepreneurship research in Central and Eastern Europe is still under-developed. One of the most important questions of individuals pursuing entrepreneurship as a career choice is, do entrepreneurs earn more, compared to employees? Is there a premium for undertaking the risks of self-employment? Our study aims to contribute to this research by comparing the earnings of employees, solo-self-employed and self-employed with employees (job creators). For this purpose, we utilise data from the two recent harmonised waves of the European Survey on Working Conditions (2010 and 2015). The analysis is focused on Visegrad countries (Czech Republic, Hungary, Poland and Slovakia) and is empirically based on the OLS approach and nearest neighbour matching approach. Controlling for some key individual characteristics, we find positive returns to entrepreneurship. However, we show that the OLS approach over-estimates the size of the returns to entrepreneurship and therefore we methodologically rely more on the matching approach. Based on the obtained matching estimates we show that self-employed without employees earn on average 6.7% more when compared to employees, and to self-employed with employees even on average 22% more than employees. Finally, once we compare solo-self-employed and entrepreneurs having employees, we find that job creators earn on average 22% more when compared with solo-self-employed.