An Empirical Analysis of Interrelationship between Income, Health and Entrepreneurship

Abstract

This study uses a longitudinal data set from 1991 to 2008 to investigate the relationship between income, health and entrepreneurship in the long term. Different from previous research based on cross-sectional data, our study finds that the self-employed do not have an advantage in earnings over the employee, and the interrelation between income and entrepreneurship is rather small in the long run. This is because incomes of the employee grow steadily over the years while those of the self-employed fluctuate almost around a constant level. Moreover, the self-employed are in associa-tion with better subjective well-being but worse objective health condition than the employee, largely because of the work characteristics of the two employment options. However, the self-employed tend to visit hospital less than the employee in spite of their poorer physical health. Based on the principal findings in this study, we provide some valua-ble policy suggestions aimed at promoting entrepreneurship.