Jörn H. Block () (Erasmus University Rotterdam, Technische Universität München) Lennart Hoogerheide () (Erasmus University Rotterdam) Roy Thurik () (Erasmus University Rotterdam, EIM Business and Policy Research, Zoetermeer, Max Planck Institute of Economics, Jena)
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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 is the first to account for this endogeneity by using an instrumental variables approach. The effect 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, the higher the respondent's level of education, the greater the likelihood that he or she starts a business. Implications for method and practice are discussed.
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