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Article

Распределение предпринимательских способностей и производительности: структура рынка труда

This paper studies how heterogeneous individuals, that differ by entrepreneurial skills
and  productivity  as  a  worker,  endogenously  choose their  occupation  (workers  vs.
entrepreneurs) based on expected income comparison (wages vs. profits). Each entrepreneur runs a
firm  that  produces  a  single  variety  of  a  horizontally  differentiated  good  under  monopolistic
competition. We show that the cutoff for occupational selection between workers and
entrepreneurs is a negatively sloped curve in the space of individual characteristics. The form of this
cutoff curve does not depend on the distribution of
individual characteristics, but is affected by the elasticity of substitution between varieties.
Changes in the distribution of individual characteristics can shift the cutoff curve.
Thus individual employment choices depend not only on the
distribution of characteristics, but also on the degree of competition in the market. We show
that when the distributions of entrepreneurial skills and worker productivity are independent
and follow power laws, an increase in the average worker’s ability decreases the share of
entrepreneurs, whereas changes in the average entrepreneur’s skills do not affect this share.
Estimates based on Current Population Survey (CPS) data are in line with the theoretical shape of
the cutoff curve, and our estimates of the elasticity of substitution are close to those usually
found in the literature.