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Going into Business and Out of Business: The Role of Human Capital

Author

Listed:
  • Arnab Bhattacharjee

    (Heriot-Watt University, Edinburgh,UK)

  • Jean Bonnet

    (Normandie Université, UNICAEN, CREM CNRS, France)

  • Nicolas Le Pape

    (Normandie Université, UNICAEN, CREM CNRS, France)

  • Régis Renault

    (Université de Cergy-Pontoise, THEMA)

Abstract

An evaluation of the impact of an entrepreneur's human capital on her/his entrepre-neurial ability is likely to suffer from a sample selection bias if performed on a sample of new entrepreneurs alone. Our theoretical model of entrepreneurial choice allows us to characterize this bias. It is shown to be positive (respectively negative) for individuals who were in a favorable (respectively adverse) situation in the labor market at the time at which they decided to become self-employed. Our empirical application measures the impact of the entrepreneur's education on the newly created firm's survival. It is found to be strong and significant for individuals who were previously employed in the new firm's branch of activity, whereas it is at best weakly significant for individuals who were previously unemployed or employed in a branch different from that of the new firm, so that they are more likely to have been poorly matched. These results suggest a very substantial sample selection bias in our sample.

Suggested Citation

  • Arnab Bhattacharjee & Jean Bonnet & Nicolas Le Pape & Régis Renault, 2016. "Going into Business and Out of Business: The Role of Human Capital," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 2016-04, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    • Handle: RePEc:tut:cremwp:2016-04
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    entrepreneurial ability; labor market; human capital; ?rm survival;
    All these keywords.

    JEL classification:

    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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