Vera Rocha IZA Research Affiliate

Vera Rocha has accepted a 2 year appointment as Research Affiliate at the Institute for the Study of Labor (IZA).

IZA, established in 1998, is a non-profit research center in labor economics supported by the Deutsche Post Foundation.

IZA is now widely recognized as a leading institute for labor market research. This success is based on a dynamic local team in Bonn, Germany, as well as the world’s largest network of labor economists who cooperate with us as research fellows and affiliates. IZA also maintains close ties with the renowned economics faculty at the University of Bonn as with many other universities and policy-oriented research centers around the world.

The affiliation will give Vera the opportunity to join the many research activities of the Institute.

The Residence Week for Entrepreneurship Scholars

The Residence Week for Entrepreneurship Scholars is an innovative initiative on the part of Saul Estrin (London School of Economics) and Mirjam van Praag (Copenhagen Business School), organised for the first time in the summer of 2012 in order to bring together leading figures in the field of economics of entrepreneurship. Following the success of the three previous years and due to popular demand for its repetition, the 4th Residence Week for Entrepreneurship Scholars took place June 29 – July 3, 2015 in Oxford with the generous support of the Templeton Education and Charity Trust.

What differentiates the Residence Week from other conferences is the tradition of having no preordained programme. This ensures an informal setting that many participants list as a unique advantage of the event. During the day people work on their own projects or collaborate with old and new colleagues. Formal presentations are only organised after 4pm, allowing scholars to create the ideal balance between individual research and sharing ideas.

This year, the diversity of the topics presented during the afternoon sessions reflected the broad spectrum of the field of entrepreneurship research, touching upon for instance social and hybrid entrepreneurship, equity (crowd)funding, decision-making styles, and the impact of human capital on start-up performance. The presentations conveyed new insights about the behaviour of social and commercial entrepreneurs, corporate managers, and the importance of venture capital and other types of equity investors.

Participants from INO were: Mirjam van Praag, Toke Reichstein, Orsola Garofalo and Vera Rocha.

Serial Entrepreneurship, Learning by Doing and Self-selection

Vera Rocha is co-authoring this article on the lessons learned by serial entrepreneurs.

It remains a question whether serial entrepreneurs typically perform better than their novice counterparts owing to learning by doing effects or mostly because they are a selected sample of higher-than-average ability entrepreneurs. This paper tries to unravel these two effects by exploring a novel empirical strategy based on continuous time duration models with selection. We use a large longitudinal matched employer-employee dataset that allows us to identify about 220,000 individuals who have left their first entrepreneurial experience, out of which over 35,000 became serial entrepreneurs. We evaluate whether entrepreneurial experience acquired in the previous business improves serial entrepreneurs’ survival, after taking into account self-selection issues. Our results show that serial entrepreneurs are not a random sample of ex-business owners. Robustness tests based on the estimation of the person-specific effect, using information on individuals’ past histories in paid employment, confirm that serial entrepreneurs exhibit, on average, a larger person-specific effect than non-serial business owners. Moreover, ignoring serial entrepreneurs’ self-selection overestimates learning by doing effects.

Find the article here.

Entry and exit dynamics of nascent business owners

This paper co-authored by Vera Rocha reports a comprehensive study on the dynamics of nascent business owners using a unique longitudinal matched employer–employee dataset. We follow over 157,000 individuals who leave paid employment and become business owners during the period 1992–2007. The contributions of this paper are twofold. First, we analyze both entry and exit, identifying and characterizing different profiles of individuals leaving paid employment to become business owners, and distinguishing exits by dissolution from exits by ownership transfer. Second, we provide new evidence on how particular experiences in the labor market and entry modes shape the post-entry dynamics of nascent business owners. By differentiating between different entry and exit routes, this paper provides new evidence on different human capital patterns among nascent business owners and on key determinants of entrepreneurial survival. Our results suggest that different exit modes can be predicted by business owners’ entry route. Furthermore, different exit modes exhibit different duration dependence patterns according to the entry mode. Additionally, the paper shows that businesses started after a displacement episode are not necessarily less successful. Those individuals entering entrepreneurship after being displaced due to previous employer closure are found to persist longer.

Find the article here.


What Explains the Survival Gap of Pushed and Pulled Corporate Spin-offs?

Based on the PhD thesis of Vera Rocha this article has been published in Economics Letters.

Abstract: Unconditionally, pushed spin-offs are found to survive longer than their pulled counterparts. Using matched employer-employee data and novel multivariate decomposition techniques, we show that pushed spin-offs’ relative survival advantage is mostly explained by their larger human capital endowments at entry.

Find the article here.

Where Do Spin-Offs Come From?: Start-Up Conditions and the Survival of Pushed and Pulled Spin-Offs

Vera Rocha has contributed to the book Entrepreneurship, Human Capital, and Regional Development.

Although previous research shows that spin-offs are among the most successful firms in an industry, outperforming de novo entrants, few studies consider the heterogeneity of corporate spin-offs in relation to firm performance or survival. Against this backdrop, the objective of the present chapter is twofold. First, this study aims to add to our knowledge on the relationship between spin-off type and firm survival using a comprehensive matched employer-employee dataset from Portugal. After controlling for their different start-up conditions—namely regarding initial hiring schemes, business-owners’ characteristics, and the industrial and geographical relatedness to the parent firm—and a set of firm, industry, and macroeconomic characteristics, we found no significant survival differences between opportunity and necessity spin-offs. Second, based on the findings, we suggest that necessity spin-offs have not received the attention they deserve. Not only do necessity spin-offs perform an important role in the dynamics of competitive markets, by offering a possible solution for recently displaced individuals, but they also create new jobs and help to prevent the depreciation of workers’ human capital.

Read the chapter here:

Gender Pay Gaps and the Restructuring of Graduate Labour Markets in Southern Europe

Vera Rocha is co-authoring this article investigating whether education-job mismatches and growing occupational diversity are important explanatory factors of gender pay gaps amongst university graduates in Southern Europe (namely in Portugal, Spain, and Italy). We use standard decomposition techniques and test the implications of controlling for selection bias. Our results indicate that over-education and greater occupational segregation associated with the emergence of new graduate job profiles are important determinants of earnings inequality. Whilst our focus is on graduates’ early careers, demonstrating that occupational assignment and selection into employment shape gender pay gaps amongst the highly skilled provides a more pessimistic view on the ability of educational expansion or equal pay legislation to significantly reduce gender pay inequality. Southern European economies are also particularly interesting to look at since there may be a greater degree of mismatch between the pace of higher education expansion and the changes in the job structure, making women particularly vulnerable to over-education.

Link to the full article