Entrepreneurship is widely recognized as a driver of economic development and income mobility, but its impact on income inequality remains complex. This paper investigates the relationship between entrepreneurship and income inequality using pseudo-panel data constructed from the Global Entrepreneurship Monitor (GEM) across 17 OECD countries over a ten-year period. By tracking synthetic cohorts defined by gender and birth year, we explore how different types of entrepreneurship—namely opportunity-driven and necessity-driven—relate to income distribution dynamics. Our results show that opportunity-driven entrepreneurship is positively associated with upward income mobility and a reduced likelihood of being in the bottom third of the income distribution. In contrast, necessity-driven entrepreneurship shows no such benefit and may correlate with lower income persistence. These effects are significantly moderated by national social expenditure levels: in countries with higher public spending, the positive impact of opportunity entrepreneurship on income distribution is amplified. The findings suggest that entrepreneurship can contribute to more inclusive growth—but only under supportive institutional conditions. Public policies that promote high-quality entrepreneurship while ensuring strong social protection may help mitigate inequality and enhance the economic benefits of entrepreneurial activity.