Are entrepreneurs more upwardly mobile?

Entrepreneurship is often hailed as a path to upward intergenerational mobility, but few studies have explicitly tested this belief. Drawing on insights from the literature on entrepreneurial heterogeneity and returns, we compare the extent and direction of mobility across generations among Swedish...

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Bibliographic Details
Published in:Journal of business venturing Vol. 40; no. 4; p. 106498
Main Authors: Lindquist, Matthew J., Vladasel, Theodor
Format: Journal Article
Language:English
Published: Elsevier Inc 01.07.2025
Subjects:
Economics
Entrepreneurship
Incorporation
Intergenerational mobility
Lifetime income
nationalekonomi
Upward mobility
Lifetime income
Incorporation
L26, J24, J62
Upward mobility
Entrepreneurship
Intergenerational mobility
ISSN:0883-9026, 1873-2003
Online Access:Get full text
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Summary:Entrepreneurship is often hailed as a path to upward intergenerational mobility, but few studies have explicitly tested this belief. Drawing on insights from the literature on entrepreneurial heterogeneity and returns, we compare the extent and direction of mobility across generations among Swedish entrepreneurs and employees. We study intergenerational income rank mobility using high-quality lifetime income measures for 215,000 father-son pairs. Entrepreneurs are drawn disproportionately from both poorer and richer families, but the patterns we uncover hold across the entire paternal income distribution. Sons who own incorporated businesses are more upwardly mobile across generations than employees; sons who own unincorporated businesses are more downwardly mobile. Selection on (un)observable traits fully explains incorporated sons’ moves up, but only a small share of unincorporated sons’ moves down. Income underreporting and, crucially, lower returns to human capital explain the remaining downward mobility. Unincorporated ventures appear to use entrepreneurs’ human capital inefficiently. •Entrepreneurship is often thought to lead to upward mobility across generations, but evidence is limited•We compare intergenerational income rank mobility of entrepreneurs and employees, with 215,000 Swedish father-son pairs•Incorporated entrepreneurs are more upwardly mobile than employees due to positive self-selection•Unincorporated entrepreneurs are more downwardly mobile due to negative self-selection, income underreporting, and lower returns to skills•Unincorporated ventures appear to use entrepreneurs’ human capital inefficiently
ISSN:0883-9026
1873-2003
DOI:10.1016/j.jbusvent.2025.106498