@TechReport{iza:izadps:dp2071, author={Parker, Simon C.}, title={A Selection-Based Theory of the Transition from Employment to Entrepreneurship: The Role of Employer Size}, year={2006}, month={Apr}, institution={Institute of Labor Economics (IZA)}, address={Bonn}, type={IZA Discussion Paper}, number={2071}, url={https://www.iza.org/index.php/publications/dp2071}, abstract={A simple occupational choice model is used to predict that entrepreneurs who found new firms are more likely to work for small than for large firms prior to start-up. The mechanism underlying the result is heterogeneous risk aversion. The model also predicts a positive association between new firm formation and previous self-employment experience. These predictions accord with previous empirical findings, but notably self-selection rather than productivity effects can explain them.}, keywords={entrepreneurship;occupational choice;firm size}, }