Entrepreneurs are a vital part of the economy: they increase product variety, they are responsible for innovations, and recently they became important as a source of employment for others. In this context, it is key to understand what drives entrepreneurs. In this presentation, we explore the role of "Talent workers", that is workers with a high education degree and a top 3 occupation.

1. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Talent workers as entrepreneurs:
a new approach to aspirational self-employment
Magdalena Smyk
University College London
24 June 2015

2. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Research shortcut
Research key points
Questions:
Do flows from employment to self-employment tend to attract
individuals with higher potential to innovate?

3. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Research shortcut
Research key points
Questions:
Do flows from employment to self-employment tend to attract
individuals with higher potential to innovate?
Method:
Model of choosing self-employment with special focus on
talent workers. Looking at stocks - mainly secondary
educated; but we look at flows (skill-biased technological
change requires new skills).

4. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Research shortcut
Research key points
Questions:
Do flows from employment to self-employment tend to attract
individuals with higher potential to innovate?
Method:
Model of choosing self-employment with special focus on
talent workers. Looking at stocks - mainly secondary
educated; but we look at flows (skill-biased technological
change requires new skills).
Data:
Panel - Polish Labour Force Survey 2001-2013

5. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Research shortcut
Research key points
Questions:
Do flows from employment to self-employment tend to attract
individuals with higher potential to innovate?
Method:
Model of choosing self-employment with special focus on
talent workers. Looking at stocks - mainly secondary
educated; but we look at flows (skill-biased technological
change requires new skills).
Data:
Panel - Polish Labour Force Survey 2001-2013
Result:
Talent workers are more likely to enter self-employment and
create new work places.

6. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Motivation
Motivation
Entrepreneurship (Wennekers and Thurik 1999, Van Stel et al.
2005, Carree and Thurik 2010):
job creation,
productivity growth,
development and commercialization of increasing quality and
variety products
Two types of entrepreneurship - aspirational and
necessity-driven (Naude 2010, Estrin et al. 2013)

7. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Motivation
Does Polish entrepreneurship have a chance to be
successful?
Source: EUROSTAT LFS and GEM

8. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Motivation
How to recognize ”high potential to innovate”?
Definition of talent worker by Hsieh et al. 2013:
at least tertiary education
one of the three top ISCO level occupation:
legislators, senior officials and managers;
professionals;
technicians and associate professionals

9. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Method
Method
Two identification strategies:
Identification 1: probability of switching from WE to SE
(SE=1) or change job within WE (SE=0)
P(SE = 1|tenure < 13 months) (1)
Identification 2: probability of switching from WE to SE
(SE=1) or change industry within WE (SE=0)
P(SE = 1|change industry within a year) (2)

10. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Method
Identification strategies
I1 : P(SE = 1|tenure < 13 months) = α + β talent + γ x + δ z +
(3)
I1 : P(SE = 1|tenure < 13 months) = α + β talent + γ x + δ z +
(4)

11. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Method
Additional factors: mobility and productivity
Mobility - sector level indicators z
Based on claimed changes:
High mobility sectori,t = 1 if
gross flowi,t > average gross flowt
Mobility surplusi,t = gross flowi,t − average gross flowt
Based on claimed employment:
Downsizing in employment = 1 if
# of workersi,t−1 > # of workersi,t
Income - proxy of productivity x

12. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Method
Additional factors: mobility and productivity
Mobility - sector level indicators z
Income - proxy of productivity x
Lack of SE income in LFS, so...
We calculated fitted values and residuals based on simple
Mincerian regression
Income percentile in broader groups in respect to age, gender,
residence and education level
Averaged residual in the group
Overpaid group = # of positive residualsk −# of negative residualsk
# of group membersk

13. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Data
Polish Labour Force Survey - 2001-2013
LMS individuals women men talent workers
WE 298 129 141 771 156 358 65 257
SE 39 810 12 994 26 816 8 507
U 65 310 31 794 33 516 -
I 303 917 177 536 126 381 -
WE - SE 1 534 490 1 044 381
WE - WE (id1) 21 953 8 132 13 821 3 298
WE - WE (id2) 8 182 3 125 5 057 381

14. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Data
Talent workers and tertiary educated

15. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Results
Talent workers drives self-employment entry
ID1 ID2
Talent worker 0.05*** 0.09***
Female*talent -0.01 -0.03*
Married 0.02*** 0.05***
Age 0.01*** 0.02***
Age2
-0.01*** -0.03***
Female -0.02*** -0.03***
Medium size city 0.01** 0.02**
Large city 0.01*** 0.03***
Year and quarter dummies INCLUDED INCLUDED
Industry categories INCLUDED NOT INCLUDED
Observations 23,383 9,716

16. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Results
Talent workers drives self-employment entry
Talent worker 0.04*** 0.04*** 0.05*** 0.05*** 0.05*** 0.05***
Female*talent -0.01 0 -0.01 0 0 0
high mobility 0.02***
sector
mobility surplus 1.27***
downsizing 0
employment
income 0
percentile
average residual 0.12***
overpaid group 0.01**
Observations 23,383 23,383 23,383 23,383 23,383 23,383

17. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Results
Talent workers drives self-employment entry
Talent worker 0.10*** 0.10*** 0.09*** 0.10*** 0.11*** 0.12***
Female*talent -0.03** -0.02 -0.03* -0.03* -0.02 -0.02
high mobility 0.11***
sector
mobility surplus 3.93***
downsizing 0.01
employment
income 0
percentile
average residual 0.38***
overpaid group 0.05***
Observations 9,660 9,660 9,660 9,716 9,716 9,716

18. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Results
Talent workers are more likely to become employers
Do talent workers more likely to employ? Total sample of SE
Creating jobs Creating jobs
Talent worker 0.28*** 0.03***
Occupation NO YES
Age NO YES
Age2 NO YES
Female NO YES
Residence NO YES
Married NO YES
Year and quarter YES YES
Observations 82,623 82,623

19. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Conclusions
Conclusions
1 Talent workers are more likely to establish new firm than
other switchers
2 We control for industry specific mobility, job destruction,
relative incomes or relative productivity of the worker.
3 Finally, talent workers are more likely to create new jobs.

20. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Conclusions
Thank you!

21. Talent workers as entrepreneurs: a new approach to aspirational self-employment
Conclusions
Appendix. Fields of study - results
social
STEM humanities sciences services health
Talent worker 0.06*** -0.01 0.01 -0.01 0.11*
Female*talent -0.01 0.01 0.04* 0.08 -0.04
Observations 8,715 1,006 3,127 1,927 546
social
STEM humanities sciences services health
Talent worker 0.13*** 0.01 0.03 -0.04 0.67***
Female*talent -0.04 0.02 0.04 0.13 -0.21***
Observations 3,392 444 1,555 767 176