Exploring the Income of the Czech Entrepreneurs

Exploring the Income of the Czech Entrepreneurs

Ondřej Dvouletý (University of Economics, Prague, Czech Republic)
DOI: 10.4018/978-1-7998-2714-6.ch006

Abstract

Although individuals mostly pursue an entrepreneurial career from non-economic reasons, it is also interesting to see how well they perform in their business financially. This book chapter exploits two recent waves (2010, 2015) of the European Survey on Working Conditions (EWCS) and compares earnings of the Czech self-employed, concerning characteristics including job creation, gender, age, education, and number of working hours. The obtained findings from paired t-tests and correlations show that Czech self-employed with employees (job creators) earn on average by 14.6% more when compared to solo self-employed. Gender-differences in earnings have also been found in the case of the Czech entrepreneurs. Solo self-employed women earn on average less when compared to males. The highest earnings were observed in the age group of 31-40 years, and self-employed with higher levels of education also earn, on average more. This book chapter contributes to the regional knowledge on entrepreneurship in the Czech Republic.
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Introduction

Although individuals mostly pursue an entrepreneurial career from non-economic reasons as documented by previous studies (e. g. Burke et al., 2002; Parker, 2004; Holienka et al., 2017; Aronson, 2019), it is still interesting to study, how well they perform in their business financially. Currently, entrepreneurship scholars (e. g. Manso, 2016; Van Praag and Raknerud, 2017; Sorgner et al., 2017; Hårsman and Mattsson, 2018; Hårsman et al., 2019; Dvouletý et al., 2019) have focused in their studies mainly on comparison of wage-employees and self-employed individuals with the intention to better understand the classical entrepreneurship puzzle, indicating that self-employed individuals earn less, when compared to wage-employees.

Nevertheless, it is essential to acknowledge that there are different kinds of self-employed individuals operating on the market, and thus it might not be only relevant to compare self-employed individuals with wage-employees but to also dive more in-depth into the heterogeneity of the self-employment population. The increasing volume of literature (e. g. Cieślik, 2015; Wennekers and van Stel, 2017; Dvouletý, 2018; Bögenhold, 2019; Beuker et al., 2019; Drahokoupil and Fabo, 2019) is attempting to identify different types of self-employed and to describe their roles in the economy by using various segmentation variables.

Presented book chapter follows this research stream, and it attempts to shed more light on the differences in earnings distribution across different kinds of self-employed, by using the most fundamental segmentation variables. It aims to display differences in earnings distribution of self-employed individuals concerning the traditional determinants of entrepreneurship and self-employment that have been described in the literature (Simoes et al., 2016; Van Der Zwan et al., 2016; Dvouletý, 2018), such as job creation, gender, age, education and number of working hours. We highlight in this book chapter role of these variables concerning the most fundamental segmentation variable – job creation, i. e. variable showing a difference between earnings of those self-employed individuals who stay solo, and those who employ besides themselves at least one additional person (job creators). Such analysis responses to a recent call of scholars to transfer at least this fundamental distinction into empirical practice, as these two groups of self-employed individuals significantly differ from each other (Conen et al., 2016; Dvouletý, 2018; Van Stel and Van Der Zwan, 2019). For example, Dvouletý (2018) in his recent work empirically demonstrates that self-employed individuals with employees are on an average elder, have more experience and attained higher levels of education when compared with solo entrepreneurs.

The chapter brings empirical evidence from the Czech Republic, a country that has experienced a process of economic transformation from a centrally planned economy to a market-oriented economy in early 90s (e. g. Spicer et al, 2000; Večerník, 2011; Korosteleva and Belitski, 2017; Sauka and Chepurenko, 2017; Cieślik, 2017).

Key Terms in this Chapter

Self-Employment: Occupational choice for individuals who independently run an independent business activity and take responsibility for their own behaviour, bear risks and receive profits.

European Survey on Working Conditions (EWCS): A representative survey that is being run by the European Foundation for the Improvement of Living and Working Conditions (Eurofound) since 1991 to assess and quantify working conditions of both employees and the self-employed across Europe on a harmonised basis.

Solo Self-employed: Entrepreneurs (self-employed individuals) who besides themselves, do not employ any other persons.

Czech Republic: A country established officially on 1 st January 1993, located in the middle of Europe.

Eurofound: The European Foundation for the Improvement of Living and Working Conditions (Eurofound) is a European Union Agency established in 1975, whose role is to provide knowledge to assist in the development of better social, employment and work-related policies.

Earnings: Monthly income (in EUR) from the respondent´s main paid job that was reported to the interviewer of the European Survey on Working Conditions.

Self-employed with Employees: Entrepreneurs (self-employed individuals) who besides themselves employ at least one additional person.

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