Regional differences in the risk tolerance of entrepreneurs in the European Union

This thesis studies the differences in risk tolerance between Western Europe and Eastern Europe. First, a general assessment of risk tolerance levels among the labour force is provided; second, the risk tolerance levels of entrepreneurs are compared with those of paid employees. Although earlier research has generally found a positive relationship between risk tolerance and entrepreneurship, very little information has been gathered about whether this relationship may be different across several regions. Therefore, this study tests whether the relation between the average risk tolerance of entrepreneurs in the Western countries of the European Union is different from the average risk tolerance of entrepreneurs in the Eastern countries of the European Union. Cross-sectional data of the Life in Transition Survey of 2010 are used to investigate these possible differences in risk tolerance. Results obtained from several measures of risk tolerance among approximately 6,000 employees and self-employed individuals in sixteen different countries in the European Union reveal that the absolute risk tolerance of entrepreneurs in Western Europe does not statistically differ from the risk tolerance of entrepreneurs in Eastern Europe. Moreover, risk toleration does not play a different role in the engagement of entrepreneurship in the two regions.