Re-examining the opportunity pull and necessity push debate: contexts and abilities

Abstract

This study explores how different groups of workers, according to their ability level, respond to ‘push’ and ‘pull’ factors as local labour market conditions change. Arguments based on the opportunity cost of a transition to entrepreneurship serve to link individual-level motivations, which relate to ‘pull’ or ‘push’ factors, with contextual variations, which capture the scenarios in which individuals evaluate their occupational choice. Micro-level panel data on career histories reveal that overall entries into self-employment tend to be pro-cyclical, though the relationship is moderated by individual ability levels. The negative effect of the local unemployment level is attenuated and even reverses for the least able workers; self-employment entry probability instead is highest among the ablest workers across most stages of the business cycle. The results also reveal that large urban settings provide refuge for low ability individuals, who are less likely to resort to self-employment during economic downturns.

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