Well-being and entrepreneurship: Using establishment size to identify treatment effects and transmission mechanisms.

Using data from the European Value Survey, covering more than 300,000 respondents in 32 countries between 2002 and 2012, we offer new insight into the consequences for subjective well-being of self-employment. We hypothesize that the positive link between entrepreneurship and well-being is influenced by the extent to which the decision to engage in entrepreneurship reflects voluntary choice and by the ability of the entrepreneur to match entrepreneurial preferences for autonomy, task variety, and challenging tasks to task environments. While the hypotheses are confirmed by our empirical analysis, we also find-rather surprisingly-no evidence that the effects are mediated by autonomy. To handle the endogeneity and simultaneity problems that arise from the fact that the choice to become an entrepreneur is not random and which potentially threaten the validity of our findings, we rely on a novel econometric method which allows us to sidestep the selection problem and establish that the well-being increase associated with entering into entrepreneurial activity is at least approximately equivalent to a one-decile increase in household income.

Pay dispersion and performance in teams.

Extant research offers conflicting predictions about the effect of pay dispersion on team performance. We collected a unique dataset from the Italian soccer league to study the effect of intra-firm pay dispersion on team performance, under different definitions of what constitutes a "team". This peculiarity of our dataset can explain the conflicting evidence. Indeed, we also find positive, null, and negative effects of pay dispersion on team performance, using the same data but different definitions of team. Our results show that when the team is considered to consist of only the members who directly contribute to the outcome, high pay dispersion has a detrimental impact on team performance. Enlarging the definition of the team causes this effect to disappear or even change direction. Finally, we find that the detrimental effect of pay dispersion is due to worse individual performance, rather than a reduction of team cooperation.