Education and Entrepreneurial Choice: An Instrumental Variables Analysis
AbstractEducation 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 InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 09-088/4.
Date of creation: 13 Oct 2009
Date of revision: 23 Nov 2010
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Web page: http://www.tinbergen.nl
Occupational choice; entrepreneurial choice; education; self-employment; endogeneity; instrumental variables;
Find related papers by JEL classification:
- C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- I20 - Health, Education, and Welfare - - Education - - - General
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-10-31 (All new papers)
- NEP-EDU-2009-10-31 (Education)
- NEP-ENT-2009-10-31 (Entrepreneurship)
- NEP-HRM-2009-10-31 (Human Capital & Human Resource Management)
- NEP-LAB-2009-10-31 (Labour Economics)
- NEP-SBM-2009-10-31 (Small Business Management)
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