Research

Using Norwegian administrative data on 26,970 entrepreneurs, I find that entrepreneurs advance 6.4 percentile points beyond their parents within 5 years of entry. Roughly half of this gap is already present at entry, and the rest is accumulated afterward. These gains vary sharply by background: post-entry gains are largest in the middle of the parental wealth distribution, poorer entrepreneurs show larger pre-entry advantages than post-entry gains, and the wealthiest gain little in relative terms but are the 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 the most likely to reach the top decile. Wealth mobility is notably lower than suggested by income-based measures.

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.