Entrepreneurial Income: How Does It Measure Up?

The purpose of this article is to re-examine U.S. entrepreneurial income for the 1926-1969 period. The basic division of entrepreneurial income is achieved by imputing a competitive wage to self-employed workers and allocating the residual income to capital. The implied rate of return on noncorporate capital is then computed and compared to the rate of return on corporate capital. This methodology is not novel, but the conclusions reached are markedly different from those of previous studies, which found that the noncorporate rate of return is much smaller than the corporate rate of return.