Are Entrepreneurs More Upwardly Mobile?

• Authors: Theodor Vladasel.
• BSE Working Paper: 110822 | June 22
• Keywords: intergenerational mobility , entrepreneurship , incorporation , lifetime income , upward mobility
• JEL codes: L26, J24, J62
• intergenerational mobility
• entrepreneurship
• incorporation
• lifetime income
• upward mobility

Entrepreneurship is often hailed as a path to upward intergenerational mobility, but few studies have explicitly tested this belief. We study intergenerational income rank mobility among entrepreneurs and employees in Sweden using high-quality measures of lifetime income for 215,000 father-son pairs. Incorporated entrepreneurs are more upwardly mobile than wage earners; this result is driven by selection and not by the causal impact of entrepreneurship on upward intergenerational mobility. By contrast, unincorporated entrepreneurs are more downwardly mobile, a result explained by selection, income underreporting, and lower returns to skills and education.