The impact of transitions into wage-employment for satisfied and unsatisfied entrepreneurs: A Bayesian analysis

Should unsatisfied/satisfied entrepreneurs transition into wage-employment? The purpose of this paper is to investigate the financial, physical, social and emotional consequences of the decision.

The paper uses an Australian, nationally representative panel for two Bayesian multivariate regressions.

Unsatisfied entrepreneurs that transition from self- to wage-employment improve their income, life and job satisfaction. For satisfied entrepreneurs, continuing or transitioning makes little difference: job and life satisfaction develop similarly. The health of continuing entrepreneurs suffers regardless of whether they are satisfied or unsatisfied.

Unobserved heterogeneity is only addressed within cohorts, not across cohorts. It is possible, that transitioning entrepreneurs are inherently different from continuing entrepreneurs. Further research could include a more fine-grained study of entrepreneurship’s negative health implications or include work-family balance as return to self-employment.

The findings offer clear advice to entrepreneurs that are unsatisfied with their venture: they will likely benefit from transitioning to wage-employment. In addition, it offers a warning to individuals with existing health issues who are considering self-employment.

Academic interest in entrepreneurship exit is growing. This paper is the first to study the financial, physical, social and emotional life consequences of both satisfied and unsatisfied entrepreneurs. It contributes to the discussion of what motivates entrepreneurs to become and remain self-employed.