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Comparing the Returns to Education for Entrepreneurs and Employees

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Author Info
Justin van der Sluis () (Faculty of Economics and Econometrics, Universiteit van Amsterdam)
Mirjam van Praag () (Faculty of Economics and Econometrics, Universiteit van Amsterdam)
Arjen van Witteloostuijn () (University of Groningen, University of Durham)

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Abstract

The returns to education (RTE) for entrepreneurs, unlike for employees, have not yet been estimated by methods coping with the potential endogeneity problem. We estimate the RTE for entrepreneurs and employees while testing for and coping with this problem. Our results derived from a large US sample strongly indicate that OLS renders downward biased RTE's for entrepreneurs and employees. The bias is larger for entrepreneurs. This leads to an interesting and policy relevant result: The RTE are higher for entrepreneurs than for employees (14% and 10%, respectively), whereas previous estimates suggested similar RTE's. Tests indicate that this result is robust.

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Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 04-104/3.

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Date of creation: 23 Sep 2004
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Handle: RePEc:dgr:uvatin:20040104

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Related research
Keywords: Entrepreneurship; self-employment; education; returns to education;

Other versions of this item:

Find related papers by JEL classification:
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    Other versions:
  3. Orley Ashenfelter & Colm Harmon & Hessel Oosterbeek, 1999. "A Review of Estimates of the Schooling/Earnings Relationship, with Tests for Publication Bias," Working Papers 804, Princeton University, Department of Economics, Industrial Relations Section.. [Downloadable!]
    Other versions:
  4. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2003. "Entrepreneurship Selection and Performance," Tinbergen Institute Discussion Papers 03-046/3, Tinbergen Institute, revised 24 Sep 2004. [Downloadable!]
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    Other versions:
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    Other versions:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. C. Mirjam van Praag & Justen van der Sluis & Arjen van Witteloostuijn, 2004. "The Impact of the Locus-of-Control Personality Trait on the Earnings of Entrepreneurs vis-à-vis Employees," Tinbergen Institute Discussion Papers 04-130/3, Tinbergen Institute, revised 18 Sep 2007. [Downloadable!]
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