Determinants of Self-employment

This book develops a unifying model, in which most of the§market and personal determinants are integrated and set into§perspective.§It is shown how the developed unifying model can be§converted into the well-known logit/probit models with§estimable parameters. In this way these latter models are§given a sound theoretical basis. Moreover, an explicit link§is accomplished between two fields of economics that so far§have developed almost independently: the theoretical§general-equilibrium models and the empirical logit/probit§models.§The parameters of the derived probit models are estimated§using two different data sets. The results are particularly§interesting because use is made of a data set containing§childhood and family background information of the§potentially self-employed individuals. Finally, it is shown§how the models of self-employment described in this book can§be used to analyze the transitions from a centrally planned§economy to a market economy, which takeplace in Eastern§Europe and the former Soviet republics. More specifically,§political economic conditions are derived that may stimulate§or inhibit such transitions.