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Education and Entrepreneurial Choice: An Instrumental Variables Analysis

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Author Info

  • Joern H. Block

    (Erasmus University Rotterdam, Technische Universitaet Muenchen)

  • Lennart Hoogerheide

    (Erasmus University Rotterdam)

  • Roy Thurik

    (Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena)

Abstract

Education is argued to be an important driver of the decision to start a business. The measurement of its influence, however, is difficult since it is considered to be an endogenous variable. This study accounts for this endogeneity by using an instrumental variables approachand a data set of more than ten thousand individuals from 27 European countries and the US. Theeffect of education on the decision to become self-employed is found to be strongly positive,much higher than the estimated effect in case no instrumental variables are used. That is, thehigher the respondent's level of education, the greater the likelihood that he/she starts a business.Implications for entrepreneurship research and practice are discussed.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 09-088/4.

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Date of creation: 13 Oct 2009
Date of revision: 23 Nov 2010
Handle: RePEc:dgr:uvatin:20090088

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Web page: http://www.tinbergen.nl

Related research

Keywords: Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables;

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References

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  1. Roy Thurik & Isabel Grilo & Peter van der Zwan, 2006. "The entrepreneurial ladder and its determinants," Scales Research Reports, EIM Business and Policy Research H200620, EIM Business and Policy Research.
  2. van Praag, Mirjam C. & van Witteloostuijn, Arjen & van der Sluis, Justin, 2009. "Returns for Entrepreneurs vs. Employees: The Effect of Education and Personal Control on the Relative Performance of Entrepreneurs vs. Wage Employees," IZA Discussion Papers 4628, Institute for the Study of Labor (IZA).
  3. Justin van der Sluis & Mirjam van Praag & Wim Vijverberg, 2008. "Education And Entrepreneurship Selection And Performance: A Review Of The Empirical Literature," Journal of Economic Surveys, Wiley Blackwell, vol. 22(5), pages 795-841, December.
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Cited by:
  1. Alina Sorgner & Michael Fritsch, 2013. "Occupational Choice and Self-Employment: Are They Related?," SOEPpapers on Multidisciplinary Panel Data Research 533, DIW Berlin, The German Socio-Economic Panel (SOEP).
  2. Michael Fritsch & Alina Sorgner, 2013. "Entrepreneurship and Creative Professions - A Micro-Level Analysis," Jena Economic Research Papers 2013-005, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  3. Verheul, Ingrid & Thurik, Roy & Grilo, Isabel & van der Zwan, Peter, 2012. "Explaining preferences and actual involvement in self-employment: Gender and the entrepreneurial personality," Journal of Economic Psychology, Elsevier, Elsevier, vol. 33(2), pages 325-341.
  4. Fritsch, Michael & Kritikos, Alexander S. & Pijnenburg, Katharina, 2013. "Business Cycles, Unemployment and Entrepreneurial Entry: Evidence from Germany," IZA Discussion Papers 7852, Institute for the Study of Labor (IZA).

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