Research

Does entrepreneurship move people up the wealth ladder, and for whom does it matter most? I find that, compared with closely matched non-entrepreneurs, Norwegian entrepreneurs advance 6.4 percentile points further beyond their parents within five years of entry. Roughly half of this gap is already present at entry, while the rest accumulates afterward. These returns, however, vary sharply by background. Post-entry gains are the largest in the middle of the parental wealth distribution. Poorer entrepreneurs show larger pre-entry advantages than post-entry gains, while the wealthiest gain little in relative terms but are most likely to remain at the top. Education matters in two ways: entrepreneurs with less formal schooling see the largest relative gains, while those with technical degrees are most likely to reach the top decile. Business graduates see the weakest outcomes. Wealth mobility is notably lower than income-based measures suggest.

I study individuals who become entrepreneurs following an industry downturn using the massive decline in oil prices in 2014 to understand the potential of entrepreneurship as an alternative career path for employees affected by industry downturns. The oil price decline resulted in increased entrepreneurial activity among oil workers in Norway. Compared to new entrepreneurs unaffected by the shock, such entrepreneurs of circumstance tend to originate from lower income levels within their respective companies. These entrepreneurs also run more profitable firms, and the profitability difference is unique to the cohort of firms started by employees affected by the shock.