AbstractThe theory proposed below is that entrepreneurs are jacks-of-all-trades who may not excel in any one skill, but are competent in many. A coherent model of the choice to become an entrepreneur is presented. The primary implication is that individuals with balanced skills are more likely than others to become entrepreneurs. The model provides implications for the proportion of entrepreneurs by occupation, by income and yields a number of predictions for the distribution of income by entrepreneurial status. Using a data set of Stanford alumni, the predictions are tested and found to hold. In particular, by far the most important determinant of entrepreneurship is having background in a large number of different roles. Further, income distribution predictions, e.g., that there are a disproportionate number of entrepreneurs in the upper tail of the distribution, are borne out.
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Bibliographic InfoPaper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 760.
Length: 56 pages
Date of creation: Apr 2003
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Find related papers by JEL classification:
- J4 - Labor and Demographic Economics - - Particular Labor Markets
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-05-08 (All new papers)
- NEP-ENT-2003-05-08 (Entrepreneurship)
- NEP-HPE-2003-05-08 (History & Philosophy of Economics)
- NEP-IND-2003-05-08 (Industrial Organization)
- NEP-LAB-2003-05-08 (Labour Economics)
- NEP-LTV-2003-05-08 (Unemployment, Inequality & Poverty)
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