Income Security Policy Paper No. 19
Horatio Alger Meets the Mobility Tables
Douglas Holtz- Eakin, Harvey Rosen, and Robert Weathers
July 1998
Abstract: The question of how entrepreneurship
relates to income mobility is cogent given the
current public debate about the sources of
income inequality and mobility in United
States society. We examine how experience with
entrepreneurship has affected an individual's
place in the earnings distribution. Our basic
tack is to follow individuals' positions in
the income distribution over time, and to see
how their mobility (or lack thereof) was
affected by involvement with entrepreneurship.
Our main finding is that for low-income
individuals there is some merit to the notion
that the self-employed moved ahead in the
earnings distribution relative to those who
remained wage earners. On the other hand, for
those at the upper end of the earnings
distribution, those who became self-employed
often advanced less in the earnings
distribution than their salaried counterparts.
A revised version of this paper
appears in Small Business Economics,
Vol. 14, No. 4, June 2000, pp. 243-74.
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