Does Working at a Start-Up Pay Off?

34 Pages Posted: 23 Mar 2020

See all articles by Daniel Fackler

Daniel Fackler

affiliation not provided to SSRN

Lisa Hölscher

Halle Institute for Economic Research

Claus Schnabel

University of Erlangen-Nuremberg; IZA Institute of Labor Economics

Antje Weyh

Institute for Employment Research (IAB) - Chemnitz

Abstract

Using representative linked employer-employee data for Germany, this paper analyzes short- and long-run differences in labor market performance of workers joining startups instead of incumbent firms. Applying entropy balancing and following individuals over ten years, we find huge and long-lasting drawbacks from entering a start-up in terms of wages, yearly income, and (un)employment. These disadvantages hold for all groups of workers and types of start-ups analyzed. Although our analysis of different subsequent career paths highlights important heterogeneities, it does not reveal any strategy through which workers joining start-ups can catch up with the income of similar workers entering incumbent firms.

Keywords: startups, young firms, wages, linked employer-employee data

JEL Classification: J31, J63, L26, M51

Suggested Citation

Fackler, Daniel and Hölscher, Lisa and Schnabel, Claus and Weyh, Antje, Does Working at a Start-Up Pay Off?. IZA Discussion Paper No. 13033, Available at SSRN: https://ssrn.com/abstract=3558331

Daniel Fackler (Contact Author)

affiliation not provided to SSRN

No Address Available

Lisa Hölscher

Halle Institute for Economic Research

P.O. Box 11 03 61
Kleine Maerkerstrasse 8
D-06017 Halle, 06108
Germany

Claus Schnabel

University of Erlangen-Nuremberg ( email )

Institut für Wirtschaftsforschung
Lange Gasse 20
D-90403 Nuernberg
Germany
+49 911 5302 330 (Phone)
+49 911 5302 721 (Fax)

HOME PAGE: http://https://www.arbeitsmarkt.rw.fau.de/english-version/staff/prof-dr-claus-schnabel/

IZA Institute of Labor Economics

Schaumburg-Lippe-Str. 7 / 9
Bonn, D-53072
Germany

Antje Weyh

Institute for Employment Research (IAB) - Chemnitz ( email )

Regional IAB Office Saxony
Paracelsusstr. 12
Chemnitz, 09114
Germany

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