Entrepreneurship in Brazil: A Worthy Endeavor?

Abstract

This study analyzes if there are differences between the income of entrepreneurs and wage earners in Brazil. Using data from the 2015 National Household Sample Survey database, we estimate a Mincer equation, correcting for self-selection, which explains the choice of entrepreneurship in the function of earnings related to salaried work. Subsequently, the wage differential per category is decomposed using the Oaxaca-Blinder procedure. To complete the analysis, a detailed decomposition is used to identify the explained and unexplained components of the wage gap. The results indicate that personal, cultural, and demographic characteristics affect the entrepreneurial occupational choice as well the differential in the income of entrepreneurs and employees. On average, entrepreneurs earn approximately 19.68% more than salaried workers.