PRINT THIS PAGE Human capital and the private equity premium05/11/2002. Source: University of Minnesota, Federal Reserve Bank of Minneapolis. Valery Polkovnichenko 
 What are the risks and returns of being an entrepreneur versus being a salaried employee who invests in the public market? Valery Polkovnichenko of the University of Minnesota attempts to find the answer. Such issues are important for the investor looking to understand why people start up businesses and what the perceived benefits are.
Polkovnichenko finds that although entrepreneurs have to invest a significant proportion of their personal wealth, they do not risk substantial human capital. At stake is only the labour income foregone while managing the business itself. There are intangible benefits to entrepreneurship that are considered by those starting a business to be more important than the financial risk.
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Comments are welcome at: polkovni@umn.edu or visit www.umn.edu/~polkovni/research. Tel: 612-624-6081
Copyright © 2002 Valery Polkovnichenko
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