Possible explanations for earnings differentials in self‐employment and paid employment are investigated. The empirical results suggest that the nonpecuniary benefits of self‐employment are substantial: Most entrepreneurs enter and persist in business despite the fact that they have both lower initial earnings and lower earnings growth than in paid employment, implying a median earnings differential of 35 percent for individuals in business for 10 years. The differential cannot be explained by the selection of low‐ability employees into self‐employment and is similar for three alternative measures of self‐employment earnings and across industries. Furthermore, the estimated earnings differentials may understate the differences in compensation across sectors since fringe benefits are not included in the measure of employee compensation.

Restricted government spending along with universal health insurance has led to longer queues for surgical procedures in Canada versus the United States. Yet it is unclear whether these treatment delays affect health outcomes. This paper tests this hypothesis by comparing the determinants of wait time for hip-fracture surgery and its impact on postsurgery length of stay and inpatient mortality in Canada and the United States. Hazards for surgery/no surgery and discharge alive versus dead are modeled using a competing-risks model. Day of the week of admission is used to help identify the surgery wait-time distribution. We control for unobserved (to the econometrician) health status which may affect wait times and outcomes by assuming a semiparametric distribution for unobserved heterogeneity. We find that predicted hazards for inpatient mortality are virtually identical in Canada and the United States. Yet wait times for surgery are longer in Canada, and surgery delay has a significant impact on postsurgery length of stay in both countries. However, the magnitude of this effect is small relative to other patient and hospital-specific factors. Focusing attention on treatment delays as a weakness in the Canadian health care system may be misleading policymakers from hospital-specific inefficiencies that may have more-important implications for health care costs and patient welfare. © 2000 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology