Digitalization of Work and Entry into Entrepreneurship

We investigate the relationship of the new wave of digitalization of occupations with entry into different types of entrepreneurship in the United States, including entry into digital entrepreneurship. Based on the Current Population Survey for 2011–18 and using different measures of digitalization that reflect its destructive and transformative impacts on occupations, we provide evidence that digitalization is significantly associated with entrepreneurial entry at the individual level. The results suggest that high-skilled employees and employees in ICT occupations facing destructive digitalization have an increased likelihood of becoming entrepreneurs with unincorporated businesses. However, entrepreneurship does not seem to be a viable option for low-skilled individuals affected by destructive digitalization. We further find that starting an incorporated business is more likely and starting an unincorporated business is less likely for employees facing transformative digitalization. Apparently, advances in AI create opportunities for growth-oriented entrepreneurship, but also increase the opportunity cost of less ambitious entrepreneurship.

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