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The role of entrepreneurship in rising wealth and income inequality
Stockholm School of Economics, Institute for Economic and Business History Research.
(English)Manuscript (preprint) (Other academic)
Abstract [en]

Economist Thomas Piketty has proposed that the increasing income share of high earners in the US has been caused by the growing ability of managers in large organizations to extract rents. This conclusion is based on tax data where it is difficult to separate salaried and self-employed individuals. We therefore use a more detailed analysis of tax data as well as self-reported data on income, wealth and business activity to examine the validity of Piketty´s theory. Tax data indicates that the share of salaried managers amongst the top 0.1 percent of earners declined from 38 to 20 percent between 1979 and 2005. Self-reported data from the Survey of Consumer Finances for the period 1989-2016 confirms that entrepreneurial households make up a large share of top income earners. Increasing managerial bargaining power is unlikely to have been the primary driving force behind the increase in top incomes in recent decades.

Keywords [en]
wealth, income distribution, entrepreneurship
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:kth:diva-235380OAI: oai:DiVA.org:kth-235380DiVA, id: diva2:1250684
Note

QC 20180926

Available from: 2018-09-24 Created: 2018-09-24 Last updated: 2018-09-26Bibliographically approved
In thesis
1. The Absent Entrepreneur: Exploring the Role of the Entrepreneur in Economics
Open this publication in new window or tab >>The Absent Entrepreneur: Exploring the Role of the Entrepreneur in Economics
2018 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

Economics as an academic discipline has often found it difficult to formally model the Entrepreneur. As Baumol (1968) noted, “The theoretical firm is entrepreneurless—the prince of Denmark has been expunged from the discussion of Hamlet.”This dissertation first examines if the entrepreneur is still absent from economics and then seeks to apply the concept of the entrepreneur to some contemporary economic discussions. Finally, I examine a concept closely associated with entrepreneurship: Philanthropy.The first and second article examine the presence of the entrepreneur and the family firm in the current economic “canon” in economics PhD programs. We find that the entrepreneur remains scarce in economics, but that some recent included works attempt to model entrepreneurship. The family firm is entirely absent from the surveyed literature.The third article examines the impact of a major Swedish educational reform that lengthened mandatory education on self-employment outcomes. I find that reform participants are less likely to operate marginal businesses.The fourth article examines income inequality in the United States in relation to entrepreneurship. Using the “Supermanager” hypothesis of Thomas Piketty as a starting point, we argue that entrepreneurs and managers in closely held firms play an important role in rising income inequality.Finally, the fifth article examines the state of Swedish philanthropy, a field usually fueled by successful entrepreneurship. We examine the productivity of philanthropic funding of research relative to other R&D funding and conclude that the main predictor of publication and patent output appears to be overall funding, not funding structure.

Place, publisher, year, edition, pages
KTH Royal Institute of Technology, 2018. p. 137
Series
TRITA-ITM-AVL ; 2018:49
Keywords
entrepreneurship, education, income distribution, philanthropy, economics
National Category
Economics
Research subject
Economics
Identifiers
urn:nbn:se:kth:diva-235382 (URN)978-91-7729-968-4 (ISBN)
Public defence
2018-10-23, F3, Lindstedtsvägen 26, Stockholm, 14:00 (English)
Opponent
Supervisors
Funder
Marianne and Marcus Wallenberg Foundation
Available from: 2018-09-25 Created: 2018-09-24 Last updated: 2018-09-26Bibliographically approved

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CiteExportLink to record
Permanent link

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Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
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  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
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