Entrepreneurship: Job satisfaction links with life satisfaction

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Entrepreneurship: Job satisfaction links with life satisfaction

"Being one’s own boss has been shown to increase individuals’ satisfaction with their job, despite drawbacks such as initially often decreased incomes through self-employment."

Martin Binder and Alex Coad

A repeated theme in entrepreneurship research is the “own-boss” effect on job satisfaction; the self-employed entrepreneur gets lots of it. Recent research suggests that not only job satisfaction is higher among the self-employed when compared to the wage-workers, but also overall life satisfaction. The research indicates that both job and life satisfaction continues to increase for up to two years from the moment they leave wage employment to start their own business.
"Individuals who move from regular employment into self-employment experience an increase in life satisfaction"

Martin Binder and Alex Coad

An important issue that needs to be addressed when we talk about entrepreneurship is the distinction between opportunity and necessity entrepreneurial activity; those who start a business because they see an opportunity in the market for a product or service, and those who start a business because they have no other effective source of income. (see previous article: Self-employed or Entrepreneur?

Evidence suggests that a long period of unemployment is negatively related to new entrepreneurs' satisfaction. Other things that need to be also considered when comparing wage-workers and entrepreneurs with regards to their job and life satisfaction, are how long for example have they been self-employed, or how long had they been wage-workers before starting up their own business.
"Another consistent finding among both self-employed individuals and employees is that those who have experienced recent spells of unemployment tend to be less satisfied with their jobs both in terms of type of work and job security"

Millán, José María, et al.

The fact is, that over and over again research on entrepreneurship reveals that the self-employed have on average, higher life satisfaction than those in regular employment, they tend to be healthier, and contrary to intuition, their expected income is lower than that of wage-workers. Also, they tend to work longer hours. Still, they seem to be happier overall. Maybe the old folk wisdom adage that money does not bring happiness might not be far from the truth after all, at least for those in the typical wage-employment.

"Moving into unemployment from any type of employment is associated with a negative change in life satisfaction and leaving unemployment is also positively associated with an increase in life satisfaction. Interestingly enough, the effect of moving from employment to self-employment is larger than vice versa."

Martin Binder and Alex Coad


Martin Binder and Alex Coad, Life satisfaction and self-employment: A matching approach, Small Business Economics 40(4) · January 2010, DOI: 10.1007/s11187-011-9413-9

Millán, J.M., Hessels, J., Thurik, R. and Aguado, R., Determinants of job satisfaction: a European comparison of self-employed and paid employees. Small business economics, Small Business Economics 40(3):651–670 · April 2013, DOI: 10.1007/s11187-011-9380-1

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